Insurance regulator IRDAI has proposed an increase in the third party (TP) motor insurance premium rates for various categories of automobiles from cars and two-wheelers. This means insurance premium rates will go up for the owners of such vehicles. Do remember that the final price you pay for a motor insurance premium consists of TP premium. The final price usually consists of basic own damage (OD) premium, basic third party (TP) liability premium, and a personal accident (PA) cover. On the total premium, there is also GST applicable.

IRDAI announcement

For cars not exceeding 1000 cc (like Renault Kwid, Maruti Wagon-R, Maruti Alto, and Volkswagen Polo), the TP motor insurance premium rates have gone by 14.5% from Rs 1,850 to Rs 2,120.

The rate of TP motor insurance premium has gone up by a wider margin for cars exceeding 1,000 cc but not exceeding 1,500 cc (like Maruti Baleno, Maruti Vitara Brezza, Hyundai Creta, Maruti Dzire, Tata Nexon, Honda City), the increase is 15.26% as the new rate for FY2019-20 is Rs 3,300 compared to Rs 2,863 in FY2018-19.

The rates for cars exceeding 1,500 cc has been kept untouched at Rs 7,890. In FY2018-19 too, the rate was not tinkered with for these segment of cars. Cars in this segment could be Land Rover Range Rover Evoque, Audi A4 and A6, Volvo V90 Cross Country, Mercedes-Benz C-Class, Audi Q5, Honda Accord, Honda CR-V, Honda Civic etc.

Two-wheelers

Coming to two-wheelers, those with an engine size of less 75cc will pay 12.9% more at Rs 482 compared to Rs 427.

The rate hike is smaller in those two-wheelers exceeding 75 cc but not exceeding 150 cc. You will pay Rs 752, just 4.4% higher than Rs 720. Two-wheelers in this segment could be TVS Scooty, Honda Dream Yuga, Honda Dio, Honda Activa, Bajaj Pulsar 150 etc.

The biggest quantum of the hike for FY2019-20 is in two-wheelers exceeding 150 cc but not exceeding 350 cc. Instead of Rs 985, now you will have to pay 21.1% more at Rs 1,193. Examples of this segment could be Yamaha YZF R15 V3, Bajaj Pulsar NS200, Royal Enfield Classic 350, KTM 200 Duke, TVS Apache RTR 160 4V, Suzuki Gixxer SF 250 etc.

Tarun Mathur, Chief Business Officer- General Insurance, Policyabzaar.com said: “There will be an increase in TP insurance premium by close to 15%. It is in the light of positive development for the motor insurance industry and the prices have been arrived based on the claims paid data of the last seven years. It should not have a major impact on sales as the hike of 15% is manageable.”

For two-wheelers exceeding 350 cc, the TP motor insurance premium rate is untouched at Rs 2,323. Bikes in this segment could be Royal Enfield Interceptor 650, Kawasaki Ninja 400, etc.

Sanjay Seth, Executive Vice President, IFFCO Tokio General Insurance Company, said, “Keeping in line with the prudent underwriting norms, premium rates have to match with claim experience of the industry. Currently, this is not happening in the Third Party (TP) motor insurance segment, especially when claims/losses are going haywire.

The industry has seen an increase in the third party claims both in terms of numbers and values. Some judgements in the past couple of years have caused a sharp rise in Award amount. The increase in TP premium rates will help the industry to reduce overall losses to some extent.”

A discount of 15%, on motor TP premium rates for electric private cars and electric two wheelers, is proposed. This will be an incentive to use environmentally friendly vehicles.

Seth said, “It is also encouraging that IRDAI has proposed a discount of 15% on the premium rates for e-vehicles, as it can give the much-needed fillip to the growth of electric vehicle market in India.”

As for the vintage cars segment, there is no substantial data relating to past experience. “A discounted price of 50% of the proposed rate based on the erstwhile Indian Motor Tariff (IMT) has been proposed for those private cars identified as Vintage Cars by the Vintage and Classic Car Club of India,” IRDAI said.

Category Vehicle Type Existing Rates (Rs)
FY 2018-19
Proposed Rates
(Rs) FY 2019-20
Example * % hike
Private Cars    
  Not exceeding 1000 cc 1,850 2,120 Renault Kwid, Maruti Wagon-R, Mauti Alto, Volswagen Polo 14.59
  Exceeding 1000 cc but not exceeding 1500 cc 2,863 3,300 Maruti Baleno, Maruti Vitara Brezza, Hyundai Creta, Maruti Dzire, Tata Nexon, Honda City 15.26
  Exceeding 1500 cc 7,890 7,890 Land Rover Range Rover Evoque, Audi A5, Volvo V90 Cross Country,
Mercedes-Benz C-Class, Audi Q5, Honda Accord, Honda CR-V, Honda Civic
0.00
Two Wheelers    
  Not exceeding 75 cc 427 482 N.A. 12.88
  Exceeding 75 cc but not exceeding 150 cc 720 752 TVS Scooty, Honda Dream Yuga, Honda Dio, Honda Activa, Bajaj Pulsar 150 4.44
  Exceeding 150 cc but not exceeding 350 cc 985 1,193 Yamaha YZF R15 V3, Bajaj Pulsar NS200, Royal Enfield Classic 350, KTM 200 Duke, TVS Apache RTR 160 4V, Suzuki Gixxer SF 250 21.12
  Exceeding 350 cc 2,323 2,323 Royal Enfield Interceptor 650, Kawasaki Ninja 400 0.00

Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on kumarsroy@rupeeiq.com