IRDA Issues a Steep Raise in Motor Insurance

Posted on 19 Apr 2016 by Easypolicy

Well, the Insurance regulatory authority of India has decided to hike the premium of commercial vehicle insurance by 30% for the financial year 2016-17 staring from 1st April. TP motor insurance of small cars (upto 1000cc) has been increased by 39.9 percent. Same goes with mid-segment cars (1000-1500cc). Bigger car owners like SUV (over 1500cc) will have to expend 25% more on car insurance. This rise in TP premium has caused uproar among truckers and other commercial vehicle owners. Third party vehicle insurance is mandatory for vehicle owners in India still it is a loss making business for general insurers. IRDA has stressed that TP insurance is made available among the various insurers and their distribution channels. This step has been taken considering the Cost Inflation Index (CII) which has seen a rise of 5.57% from the previous year.

Sources: The India Express and Business Today

Business under third party motor segment now mandatory for general insurers

Posted on 02 Jan 2015 by Easypolicy

Mumbai: The insurance ordinance has made it mandatory for all general insurers except specialised ones to underwrite a certain percentage of insuracne business as third party motor premium as required by the IRDA.

IRDA member, M Ramaprasad said, “We are working to fix the percentage of total premium collection a general insurer must do with regard to the third party motor premium. We will soon publish operational guidelines for the sector, but i also feel that the existing third party declining pool may be considered as one of the methodologies for the same.”

ICICI Lombard Chief for Underwriting and Claims Sanjay Datta said, “Well, the move will help us get more business under the motor insurance segment, since everyone owning vehicles would have to mandatorily get their vehicles insured under third party motor premium now onwards.”

He also added, “I also believe that consideration of declining pool under the segment wil be a good move when the third party motor insurance is made mandatory. Insurers will be able to pass on the risk to the pool.”

IRDA declines demand to scrap declined pool for third-party motor insurance

Posted on 26 Dec 2014 by Easypolicy

Mumbai: Insurance Regulatory and Development Authority (IRDA) has revealed the fact that it is not considering scrapping the common pool where vehicles that are denied insurance are covered.

A senior official said, “Dismantling the declined pool and free-pricing have been the main requests from the industry but we have some concerns as most of the commercial vehicle risk is currently being underwritten by public sector insurers.”

The declined risk pool allows insurers to transfer risks they are unwilling to have on their books to a pool administered by General Insurance Corporation, India's only re-insurer. In 2011, the declined pool replaced the third-party motor insurance pool, which was set up in 2007 to stem losses that were bleeding general insurers. Motor insurance in India consists of own damage cover and third-party cover. While the former is a profitable portfolio, third-party insurance, which is mandatory for every vehicle in India, is highly unprofitable as the liability for insurers is unlimited and the premium is fixed by the insurance regulator. Recently, TS Vijayan, Chairman of IRDA also said that the regulator is not considering de-tariffing the premiums and the maximum tariff that can be charged will continue to be prescribed by the regulator.

The declined pool's size has shrunk to around Rs 200 crore from Rs 3, 500 crore in 2011 because public sector general insurance companies have been underwriting commercial vehicle risk on their own books.

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