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Motor insurance to cost dearer from 1st April, 2016

Motor insurance to cost dearer from 1st April, 2016
Nikhil Puthran Nikhil Puthran Thursday 10 March 2016, 13:39 PM

The recent drop in petrol prices have brought in some relief to motorists in the country, but then, buying a new vehicle has become costlier. Add to it, motorists in India may end up spending up to an additional 30% on third party insurance premiums effective from 1st April, 2016. The hike could be effective early next month owing to a draft proposal put forth by the Insurance Regulatory and Development Authority of India (IRDAI).

As per the proposal, cars featuring engine capacities not over 1,000cc shall attract up to 30% hike, whereas cars with engine capacities over 1,000cc shall attract a premium hike of about 25%. Mr. Puneet Sahni, head of product development, SBI General Insurance Co. pointed out that the commercial vehicles have made the highest claims till date. To address this issue, the IRDI has proposed to hike about 25-30% in insurance premiums for the commercial vehicles.

The hike in insurance premium would also be applicable to the two-wheeler segment. Motorbikes powered by engines below 350cc may attract additional 10-15% premium, while the bikes featuring engines bigger than 350cc may attract 10% hike in premium rates. The insurance premium for the three-wheelers shall also been hiked. Insurance premium for autorickshaws shall go up by Rs 400, while e-rickshaw premiums may be hiked by about Rs 59. Share autos with seating capacity of about 6-17 seats are likely to witness a heavy 115% hike to bring the amount to Rs 2,059 as against the current premium of Rs 959.

The premium for six-wheelers shall be hiked by about 51% bringing the amount to Rs 2,229. Speaking on the occasion to TOI, Mr Sahni added, “We need to do a balancing act. The motor insurance portfolio for insurers has been bleeding for many years now. But we can't place the burden of their losses on policyholders. So we can only gradually increase rates to curb losses. A 30% hike again falls short of what insurance actuaries would want - given the loss ratios are between 80-150% for general insurers in the country. To curb losses, what we need is not higher premiums but regularization. We are pushing for the implementation of the Road Transport & Safety Bill and Motor Insurance Act 1988, so that there is a cap on liability, geography and the time period within which a claim can be filed.”


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