Motor Insurance to Cost More From April 1

oem-name0Insurance premium  for the car you own, or plan to purchase, will cost up to 40 per cent more from April. Two wheeler owners, even e-rikshaws, have not been spared.

Not only have their cars become more expensive due to high steel prices, insurance regulator IRDAI (Insurance Regulatory and Development Authority of India) hiked third party motor insurance premiums by up to 40 per cent on Tuesday.Banner-280120The new regime, which will come into effect from April 1, has met with discontent among all stakeholders.

For consumers, the hike is set to see insurance costs rise significantly, since third party motor insurance is mandatory.

The premium hike for small cars (up to 1,000 cc) is 39.9 per cent, increasing to Rs 2,055 from Rs 1,468.

The hike in mid-segment cars (1,000 – 1,500 cc) is about 40 per cent and in case of bigger cars and SUVs (above 1,500 cc) is 25 per cent.

For bikes and scooters, the new premium rate for two-wheelers up to 75 cc is Rs 569, up from Rs 519, for 75 cc – 150 cc the hike is 15 per cent and 25 per cent for the category of 150 cc – 350 cc.vehicle insuranceThe impact to the automobile industry is an expected decline in consumer sentiment in the short term.

While auto majors like Maruti Suzuki, Hyundai etc were unwilling to comment, a senior official in an Indian automaker said, “The increase might not be by much. But coming after two sets of price hikes, this is no boon.”

KPMG India’s Rajeev Singh concurred. “However, I do not see this having much of a long term impact,” he observed.

Finally, insurers say that the hike will do nothing to reduce losses in the motor insurance segment.

Motor insurance had a claims ratio of 77.14 per cent, with rewards for third party incidents growing by more than 20%.

“We will anyway be paying high amount of claims and this will not offset that,” pointed out a senior United India Insurance official.

No relief for claim loss for insurers

The motor insurance sector reported a 10.52 per cent growth in 2014 – 15, however losses remained high.

Motor insurance had a claims ratio of 77.14 per cent, with rewards for third party incidents growing by more than 20%.

Insurers say that the hike in third party premium rates will not make any dent on the high loss rate

Curated from Motor Insurance to Cost More From April 1

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