The Insurance Regulatory and Development Authority of India (IRDAI), in collaboration with the Ministry of Road Transport and Highways, has issued a draft notice for the revision of third party premium rates for motor insurance policies for the financial year 2022-2023. This revision proposal has been blocked for two years due to the Covid pandemic.
New car insurance premium rates
Under the revised rates, private cars with an engine capacity of 1,000 (cc) will attract rates of Rs 2,094. Similarly, private cars of 1,000 cc to 1,500 cc will attract rates of Rs 3,416 over 1,500 cc will see a premium of Rs 7,897. Two-wheelers over 150 cc but not exceeding 350 cc will attract a premium of Rs 1,366 and for two-wheelers over 350 cc, the revised premium is Rs 2,804.
For public goods carrying utility vehicles, the premium will range from Rs 16,049 to Rs 44,242 depending on the gross weight of the vehicle. For private individuals, the premium will range from Rs 8,510 to Rs 25,038.
The three-year one-time premium for new passenger cars has been revised and will attract a premium in the range of Rs 6,521 to Rs 24,596. Similarly, the five-year one-time premium for new two-wheelers will attract a premium of Rs 2,901 to Rs 15,117, depending on their engine capacity.
Change comes after two years
“This was an expected move as third party rates had not changed in the last two quarters. The increase is across the spectrum, from cars and two-wheelers to commercial vehicles. While premium rates third parties are reviewed annually by IRDAI, they were suspended in 2020, then again in 2021, to provide relief to policyholders during the pandemic,” says Ashwini Dubey, Head of Engine Renewals, Policybazaar.com.
However, with the increase in the number of third party claims after the initial drop during the Covid, the reinsurer GIC had written to IRDAI, proposing the mandatory increase in third party rates, which is now accepted. “This will lead to an increase in insurance premiums for comprehensive and third party policies, as these are also part of comprehensive policies. As third party liability insurance is compulsory by law, the increase will affect all customers,” says Dubey.
Customers who want to avoid a premium increase can renew their policies before the new rates take effect April 1, 2022, Dubey adds.
Discounts for electric vehicles
The draft notification proposes a 15% discount for electric passenger cars, electric two-wheelers, commercial vehicles carrying electric goods and electric vehicles carrying passengers. The proposed discount should encourage the use of environmentally friendly vehicles. Electric passenger cars will attract a premium of Rs 1,780 to Rs 6,712 depending on their capacity expressed in kilowatts. Similarly, two-wheeled electric vehicles will attract premiums in the range of Rs 457 to Rs 2,383. Additionally, hybrid electric vehicles will enjoy a 7.5% discount on automotive third party premiums.