Premium rates for the mandatory, third party insurance cover are set to increase for various categories of motor vehicles, including by a steep 40 per cent for private cars in the 1000-1500 cc segment.
Setting the stage for the hike was an order of the Insurance Regulatory and Development Authority of India (IRDAI) on Monday notifying the premium rates for 2016-17.
The order, which follows an exposure draft issued earlier this month mooting a 3 to 30 per cent hike in the rates for different vehicles, pegged the premium for private cars (not exceeding 1000 cc) at Rs.2,055.
This will be over 28 per cent more compared to the Rs.1,468 premium that such owners need to pay at present. The draft had proposed a premium of Rs.1,908.
For private, 1000-1500 cc cars, a segment which features some of the popular, fast moving models such as Maruti Swift, Honda Amaze and Ford Ecosport, the premium will be Rs.2,237.
The existing rate is Rs.1,598 while the draft had proposed Rs.1,998.
For the cars above 1500 cc, the new premium rate is Rs.6,164 or 25 higher compared to the Rs.4,931 that is levied now.
The draft had also proposed Rs.6,164. The new rates of third party premium for two wheelers is as follows, similar to what was the exposure draft had suggested: Not exceeding 75 cc – Rs.569 (existing Rs.519); 75 cc-150 cc – Rs.619 (Rs.538); 150 cc-350 cc – Rs.693 (Rs.554). There is a reduction in the premium for two-wheelers over 350 cc from Rs.884 to Rs.796.
IRDAI’s Senior Joint Director Suresh Mathur said some stakeholders had wanted the minimum increase in the rates to reflect the increase in Cost Inflation Index over the year.
The Authority, however, decided not to increase the proposed premium rates in such cases and keep the premium as proposed in the exposure draft.
Insurers, he said, are not permitted to cancel the current insurance policies and issue fresh policies to effect new premium rates.
While maintaining the existing rates for some category of goods carrying vehicles, public carriers (other than 3 wheelers), the regulator has notified an increase, ranging from 15-30 per cent for others.