The Insurance Regulatory and Development Authority of India’s (IRDAI) has decided to hike third party motor insurance premiums for 1000CC to 1500CC private cars by up to 40 per cent and for 150CC to 350CC two-wheelers by up to 25 per cent from April 1, 2016.
With this year’s hike, the premium rate of all private cars with engine capacity higher than 1,500CC will increase by an additional 25 per cent. Similarly, for two-wheelers, premiums would go up 10-15 per cent for 150CC bikes, while there would be a 25 per cent hike in premiums rates for two-vehicles with engine capacity of 150CC to 350CC. However, high-powered motorcycles with engine capacity of more than 350CC will see a decline of 10 per cent in premiums from April 1.
Cost inflation index has been recorded to be increased by 5.57 per cent from 1,024 in financial year 2015 to 1081 in 2016 by the IRDAI, which regulates and revises third-party motor premium per year, on the basis of inflation and claims. It has been made mandatory to all motor vehicles on roads to have a third-party insurance which covers the owner from third party liability arising out of accidents or damage.
The net incurred claims of non-life insurers which was Rs 49,179 crore in 2013-14 increased to Rs 55,232 crore in 2014-15 showing an increase of 12.31 per cent in year 2015.
At a whole, health and motor insurance had a high claims ratio at 96.93 per cent and 77.14 per cent respectively whereas motor insurance space had seen a 20-30 per cent growth even after experiencing growth in premiums.