General Insurers Expecting Increase in Third Party Motor Insurance Premium Rates in FY 21-22

General insurance companies are eyeing an increase in the third party motor insurance rates for 2021. General insurers believe that the premium should be revised so as to make the industry sustainable. It must be noted that the judgements made by the courts in the past have also had a significant impact on the sector. Moreover, Insurance Regulatory and Development Authority of India (IRDAI) notifies the rates on an annual basis, which have not been changed last year due to the Covid-19 pandemic. Hence, IRDAI is yet to notify the new rates for 2021-22. 

Bhargav Dasgupta, Managing Director and CEO, ICICI Lombard General Insurance, has reportedly stated, “Our view is that last year we didn’t get a hike in rates last year. Before that in February 2020, an exposure draft for an increase had come but then the first wave of Covid-19 happened and that was put in the cold storage.”

As per the general insurance companies, the coronavirus pandemic and lockdown had brought down motor claims in the initial months, but they have started coming back to normal. Meanwhile, industry data indicate some traction in motor insurance premiums in recent months.

“The regulator has always had to perform a delicate balancing act in terms of revising motor third party premiums as they need to bear in mind the interests of both customers and insurance companies. The exercise is likely to be more complicated this year as there was no increase in TP premiums in the previous financial year while on the other hand most companies have seen an improvement in their claims experience for motor as the pandemic induced lockdown has seen fewer claims being reported especially in the first half of 2020-21”, reportedly said, Subramanyam Brahmajosyula, Head Product Development, SBI General Insurance.

It must be noted that in 2020-21, motor third party insurance premium increased by 4.4% to Rs. 10,650 crore as compared to Rs. 10,198 crore in 2019-20. However, on an overall basis motor premium fell 1.68% to Rs. 67,790 crore last fiscal.

According to Care Ratings latest report, in 2021-22, along with the expected uptick in the health insurance segment, any increase in the premium levels of the Motor TP segment, which was held steady in 2020-21, could drive the non-life premiums.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.