Tuesday, March 27, 2012

Motor insurance - IRDA Increases Rates Between 6% And 40%

Mumbai: Motor insurance rates will rise from April 1 with the insurance regulator notifying new rates for motor third-party premium. The increase ranges from 6% at the lowest end to 40% at the higher end.
Third-party cover refers to the mandatory insurance that car-owners have to buy to provide compensation for accident victims. This is the only cover where the rates are notified by the regulator after taking into account inflation, average claim amounts and expenses in servicing the claims. But insurers say that the rate hike does not cover their losses. “If the revision in third-party rates is not sufficient to take care of claims, motor own-damage claims will have to go up,” said K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance. Owndamage refers to the cover that car-owners buy to get compensated for their vehicle.
The worst affected by the hike will be commercial vehicles. For goods carrying three-wheelers, the rate has gone up the highest—from Rs 2,440 to Rs 3,415. For trucks with capacity up to 7,500 kg the rate hike is from Rs 8,420 to Rs 9,818. For private cars, the third-party impact is low with rates for a 1000cc car rising from Rs 880 to Rs 925. Earlier moves by the insurance industry to raise premium on commercial vehicles had resulted in truck unions going on a nationwide strike. The other reason why insurance companies would hike motor own-damage rates is that the national reinsurer GIC Re has hiked reinsurance rates by 15 to 20%.
Announcing the revision rates, the IRDA said: “The frequency of claims shows a steady trend. This is also a reasonably correct assumption as there is no material change in the condition of roads, driving conditions, or drivers which may cause the frequency (number of accidents per thousand vehicles) to alter significantly.”


tGoods ferrying 3-wheelers: Up from Rs 2,440 to Rs 3,415
tTrucks with 7,500 kg capacity: Up from Rs 8,420 to Rs 9,818
t1000cc private cars: Up from Rs 880 to Rs 925

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