3rd Party Motor Insurance Premium Should Increase, Says Insurance Firms; What Will Govt Decide?
The general insurance industry is pinning hopes on the government to favor their request for a raise in third party (TP) motor insurance rates for 2021-22.
Presently the rates are determined by the Insurance Regulatory and Development Authority of India (IRDAI) every year.
Insurance Cos Await New Premium Rates
Rates have not changed since 2020 owing to the pandemic. The new rates are yet to be notified.
Bhargav Dasgupta, Managing Director and CEO, ICICI Lombard, General Insurance said that in Feb 2020 an exposure draft for a hike in rates had been prepared but when the pandemic broke out, the same was put on hold.
General insurance companies are of the opinion that premium rates need a revision in order to maintain sustainability of the segment.
Factors That Could Determine This Year’s Rates
The regulator, IRDAI, has always had to strike a balance when it came to revision of motor TP premiums between interests of insurers and customers.
The same exercise gets complicated this year since there has been no revision from last year.
Another cause for complications is the fact that most insurance cos have actually experienced improvement in motor claims since a fewer number were reported in the first half of 2020, thanks to nationwide lockdowns.
The number of claims however is now starting to pick up traction.
Last year motor TP premium saw a growth of 4.4% from Rs 10,198 crore in 2019-20 to Rs 10,650 crore.
But there has been a dip in an overall basis of 1.68% to Rs 67,790 crore last fiscal.
In conclusion, Care Ratings reported that non-life premiums could be driven by an expected surge in the health segment this year, supported by a growth in premium levels of motor TP segment which was steady last year.