Renew your car insurance by March 31 as Third Party insurance may become costly from April

Renew your car insurance by March 31 as Third Party insurance may become costly from April

Come 1st April, there is an increase expected in the Motor Third party premiums. Just like every year, the Insurance Regulatory and Development Authority of India (IRDAI) is expected to declare premium of third-party insurance of two-wheelers and four-wheelers for the new financial year. A quick analysis of increments that happened over the last 6 years shows that Third Party premiums increased by 29% for cars and 23% for two-wheelers on an average.

Third party premium always remains the same across all the insurers and is decided by IRDAI considering the claims data of all insurance companies across various cubic/engine capacity of the vehicle. Reviewing and updating the third party premium rates every year is a regular practice of IRDAI. Each year, IRDAI evaluates the market segment by segment and this has proven to be a very healthy process which has helped balance the loss ratios for the industry and prices for consumers.

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Having increased the Third-Party (TP) motor vehicle insurance rates for 5 years continuously since 2013, in the last financial year, i.e. 2018-19, IRDAI decided to keep the TP rates for cars mostly unchanged and the rates were reduced for the lowest segment of vehicles. While some indicate it might increase by 10-15% this year, last year’s moderation to keep it mostly unchanged might lead to some higher increment this year. We may see the increase to be in the range of 20-30% going by the trend.

The above charts show respectively the increase in third party premium for the last six years for private cars as well as two-wheelers. It can easily be observed that TP rates for private cars have increased substantially by 20% in initial years whereas they saw a rise by 30% and 40% in subsequent years. On an average, private car vertical has seen an average increase of 29% for the third-party insurance premium. Similarly, two-wheeler vertical has seen an average of 23% across its segments over the last six years.

Irrespective of the increase, it is always advisable to insure your vehicle on time. And especially those who might be waiting till the last day need to be more cautious so that they don’t end up purchasing possibly at a higher price post policy expiry in April, while they can purchase in March itself before their policy expires.

Source:- financialexpress

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