Transporters as well as general insurance companies are unhappy with the hike in the third party motor insurance premium proposed by the Insurance Regulatory and Development Authority (IRDA), albeit for different reasons.
According to Ishwar Chander Goel, Chairman (Insurance Committee), All India Transporters Welfare Association, “If the proposed hike in third party motor insurance becomes a reality then the transport industry, especially commercial vehicle owners, will end up paying Rs 1,000 crore more as premium in different categories. We, on behalf of the transport fraternity, strongly oppose this proposal of IRDA.”
Goel felt that capping of liability and quick disposal of motor accident claims is the right solution to the problem. However, IRDA is only increasing premium rates based on the formula which is really hurting the transporters.
‘Hike inadequate’
General insurers, however, feel that the proposed hike is not adequate to offset high losses in the third party motor insurance portfolio.
In February this year, IRDA released an exposure draft, proposing to increase third party motor insurance premium rates by an average of 35 per cent for vehicles, including private cars and commercial vehicles from April 1. It has invited comments from insurers and other stakeholders.
The transporters association fought a legal battle with the insurance regulator and general insurers on the hike in third party motor insurance premium last year in Calcutta High Court. However, after eight months of litigation, the court had passed a verdict in favour of the hike.
For the general insurance industry, third party motor insurance portfolio sees claims ratio of over 175 per cent, which implies for every Rs 100 premium collected the insurers pay out claims over Rs 175.
G. Srinivasan, CMD, New India Assurance, said “The premiums need to increase by 60 to 70 per cent to make the third party motor insurance segment a viable business. Through the General Insurance Council, the insurers have made a representation to IRDA, asking for further revision of rates.”
deepa.nair@thehindu.co.in