Money & Banking

Insurers eye increase in third party motor premium rates

Surabhi Mumbai | Updated on April 21, 2021

The new rates for 2021-22 are yet to be notified by IRDAI

The general insurance industry is hoping for an increase in third party motor insurance rates for 2021-22.

The rates are notified by the Insurance Regulatory and Development Authority of India (IRDAI) on an annual basis and had not been changed last year due to the Covid-19 pandemic.

The new rates for 2021-22 are yet to be notified by IRDAI.

According to general insurers, the premium needs to be revised in order to make the segment sustainable.

Further, court judgements in the recent past have also had an impact on the sector.

Impact on past claims

“Our view is that last year we didn’t get a hike in rates last year. Before that in February 2020, exposure draft for an increase had come but then the first wave of Covid happened and that was put in the cold storage,” Bhargav Dasgupta, Managing Director and CEO, ICICI Lombard, General Insurance had said.

Dasgupta also pointed out that court judgements have had an impact, even on past claims. He however, did not comment on the expected quantum of hike in rates.

Subramanyam Brahmajosyula, Head Product Development, SBI General Insurance said, “The regulator has always had to perform a delicate balancing act in terms of revising motor third party premiums as they need to bear in mind the interests of both customers and insurance companies. The exercise is likely to be more complicated this year as there was no increase in TP premiums in the previous financial year while on the other hand most companies have seen an improvement in their claims experience for motor as the pandemic induced lockdown has seen fewer claims being reported especially in the first half of 2020-21.”

The Covid -19 pandemic and lockdown had brought down motor claims in the initial months but they have started coming back to normal, according to insurers.

Meanwhile, industry data indicate some traction in motor insurance premium in recent months.

In 2020-21, motor third party premium increased by 4.4 per cent to ₹10,650 crore compared to ₹10,198 crore in 2019-20.

However, on an overall basis motor premium fell 1.68 per cent to ₹67,790 crore last fiscal.

“In 2021-22, along with the expected uptick in the health segment, any increase in the premium levels of the Motor TP segment, which was held steady in 2020-21, could drive the non-life premiums,” Care Ratings said in a recent report.

 

Published on April 21, 2021

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