Saturday, 8 June 2019

IRDAI hikes Third-party Motor insurance premium - Everything You Need To Know

Image credit - Team-BHP
Insurance Regulatory and Development Authority of India (Irdai) has increased mandatory third party (TP) motor insurance premium by up to 21 per cent for certain categories, car and two-wheeler insurance will cost more from June 16.
Normally, the mandatory motor TP insurance cover rates are revised from April 1. However, this time, the new rates for fiscal 2019-20 will be applicable from June 16.

Now, Manish Raj Singhania, Hony. Secretary of Federation of Automobile Dealers Association (FADA) has reacted to the IRDAI's decision on the announcement of hikes in third-party motor insurance. Here is what he said:-

“The Automobile Industry is already going through a difficult phase with low sales & subdued customer sentiments. This sudden change in price hike of 3rd party insurance will again dent the pace of sales, specially the 2W category which is already reeling under price hike for mandatory 5 yrs insurance and ABS/CBD implementation. We feel IRDAI should reconsider the price hike, as this increase would significantly impact the sales volume also affecting the insurance business. However, as the report says the proposed 15% discount on third party insurance on Electric Vehicles (private cars & two wheelers) is a welcome move through the sales of such vehicles are very minuscule. Going forward, we would require substantial support from all quarters and specially the insurance industry to help the automobile industry to recover from the slowing demand affected by the uncertainty around NBFC and the previous regulation passed for collecting three and five years of premium for new cars & two-wheelers respectively.”

TOP THINGS TO KNOW :-
  • The new TP insurance for smaller cars (less than 1,000 cc) will cost Rs 2,072 or 12 per cent from the existing Rs 1,850. 
  • The hike in insurance premium for cars with engine capacity of 1,000 cc to 1,500 cc has been increased by 12.5 per cent to Rs 3,221. 
  • The TP premium for cars with higher engine capacity (1,500 cc plus) has been retained at Rs 7,890.
  • The new Motor Third Party Liability Insurance Cover from June 16 will be Rs 482, up 12.88 per cent for two-wheelers with engine capacity of less than 75 cc and Rs 752 for those with engine capacity of 75-150 cc.
  • The maximum hike is for two-wheelers having engine capacity between 150-350 cc.
  • The new premium will be Rs 1,193, up 21.11 per cent from the existing Rs 985. 
  • There will be no change in TP insurance premium for super bikes (350 cc plus).
  • Irdai has also increased the TP insurance for public as well as private goods carrying vehicles.
  • There is no change for rates in case of e-rickshaw.
  • The third party insurance premium in case of school buses has been increased.

Also, there is no change in long-term single premium rates. In the case of cars, the long-term premium is for three years, and for two-wheelers, it is five years. 

Incentives For Electric Vehicles

As per IRDAI’s latest circular, a special incentive for electric vehicles have been proposed:
  • 15% flat discount on premiums of electric cars
  • Electric cars with power upto 30 kilowatts, premium has been fixed at Rs 1,761 (for one-year policy)
  • For cars with power between 30 kilowatt and 65 kilowatt, premium has been fixed at Rs Rs 2, 738
  • Electric cars with more than 65-kilowatt power, a premium has been fixed at Rs 6,707
  • For long term insurance cover of electric vehicles, the premium has been capped at Rs 4,493 (upto 30 kilowatt power)
  • Rs 8,104 for long term insurance cover for electric cars with power between 30 kilowatt and 65 kilowatt
  • Rs 20,659 for long term insurance cover for electric cars with power more than 65 kilowatt

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