The motor third party premium rates will go up by up to 20 per cent from April 1.
The Insurance Regulatory and Development Authority has upwardly revised third party premium rates from different categories of vehicles for 2012-13.
In an order hosted on IRDA's Web site, its Chairman, Mr J. Hari Narayan, said the claims payout showed an upward trend because of increase in court awards, wages and inflation, etc.
The increase in premium rates for different category of vehicles is in the range of 5-20 per cent.
For private cars and two-wheelers, the increase was the lowest when compared to the last year while for commercial vehicles of different categories, the hike was more.
The insurers were not permitted to cancel the current insurance policies and issue fresh ones to effect new premium rates, the Chairman said. The insurers were also directed to ensure its availability at their underwriting officers with speedy processing.
The new rates were calculated on the basis of a formula based on average claim amounts, frequency and expenses involved. The hike is expected to give some relief to the industry as insurers incurred huge losses, leading to the dismantling of the pool from March 31, 2012.
Motor premiums stood at Rs 18,000 crore out of a total premium of Rs 44,000 crore collected by the general insurance companies during 2010-11.
Last year, IRDA increased premium rates by 10-70 per cent for various categories of vehicles.