The government is considering increasing the motor third party insurance premium. IRDAI has suggested an average increase of 18 percent. Here is a detailed information about how much burden can be put on your pocket.
The government is considering increasing the motor third party insurance premium soon. This suggestion has been given by the insurance sector regulator IRDAI. According to a CNBC-TV18 report, due to this proposal, the shares of companies like ICICI Lombard General Insurance, Go Digit General Insurance and New India Assurance Company have seen a sharp rise. IRDAI has suggested an average increase of 18 percent in the premium, while in some vehicle categories this increase can be up to 20 to 25 percent.
Now the final decision on this proposal will be taken by the Ministry of Road Transport and Highways (MoRTH). It is expected that this decision can be taken in the coming 2 to 3 weeks. After the approval of the ministry, a draft notification will be issued for public consultation. After this, other processes like taking suggestions and review will be done,
only then these changes will be implemented.
Moneycontrol published this report, but did not independently confirm it. However, due to its impact, the shares of insurance companies saw a rise. Shares of ICICI Lombard rose by 7 percent and reached the highest level in the last three months. Shares of Go Digit Insurance rose by about 5 percent, which is the highest level in the last six months. At the same time, shares of New India Assurance Company rose by about 2 percent.
what is third party insurance
Motor third party insurance compensates for the damage caused to a third party in a road accident. This means that if your vehicle causes injury to a person or damages his property, then this insurance covers his expenses. This insurance is mandatory under the Motor Vehicle Act, 1988. The purpose of this insurance is that if your vehicle causes damage to someone else, then the insurance company can pay that expense.
There was no change in the premium of this insurance for the last three-four years, while many uncertainties remained in this sector. Experts believe that if the premium is increased by 20 percent, then it can improve the performance of insurance companies and provide relief to the sector.
Third party insurance premium hike for private vehicles
Private vehicles mainly include private cars and two-wheelers. IRDAI determines the premium based on the engine capacity (cc). The following is the estimated increase based on the current rates and the proposed 18-25 per cent increase for the financial year 2024-25-
