Covid-19 Impact: Third Party Motor Insurance premium to increase by 15-20% in 2022
By Sanjay Maurya
The price of petrol and diesel is already rising. This year, insurance firms are expected to hike insurance premiums. Companies intend to raise third-party vehicle insurance rates by 15 to 20%. Insurance firms have requested authorisation to increase third-party insurance by 15 to 20% in response to losses experienced by companies owing to corona in a proposal made to the Insurance and Regulatory Development Authority of India. If the corporations’ demands are satisfied, it will have a direct impact on the country’s millions of vehicle owners.
According to Zeebiz, India has around 25 general insurance companies. The insurance companies are hoping that IRDA would accept their request. Companies claim that the corona is wreaking havoc. Third-party insurance premiums are currently at an all-time low. Companies are in the red. The situation of some companies is such that their solvency has gone below their prescribed limit. Third-party insurance claims have also increased. Companies have also been put under more strain as a result of this.
Moreover, the rise in third-party motor insurance claims has increased the pressure on the service provider. Third-party vehicle insurance providers earnings are allegedly being impacted by rising refunds and stagnating premium pricing.
Third-party insurance accounts for 25% of non-life insurance firms, according to the IRDAI’s Annual Report for 2021. During the year under review, companies collected INR 40,000 crore in third-party insurance premiums, according to the reports. The increase in premium pricing for third-party motor insurances may provide insurers with much-needed relief. However, an increase in premiums might leave a dent in the average person’s wallet.
Following a Supreme Court judgement in 2018, it is now necessary to get 5 years of third-party insurance for new two-wheelers and 3 years of third-party insurance for four-wheelers when purchasing a new vehicle. Any vehicle moving on the road must have third-party insurance, according to the Motor Vehicle Act. IRDAI determines insurance premiums. Every year, the premium varies.
In addition, due to the overpopulation and poor public transportation in India during the epidemic, most individuals chose to buy two-wheelers or low-cost private vehicles. Because vehicles are more secure and separated, whereas two-wheelers can only transport two people.
According to the FADA statistics, private car sales are down 11.56 percent, while commercial vehicle sales are down 34.58 percent. However, motor insurance sales may rise soon as more individuals choose to drive their own vehicles rather than take public transportation.
