The third party motor insurance will soon become dearer as the Insurance Regulatory and Development Authority (IRDA) has proposed an increase in the payable premium. Reportedly, this revision in prices is expected to impact hard on the entry level segment, which has below 1000 cc engines, as the surge in cover as been asked by 85 per cent. The 1,000 to 1,500 cc segment will witness the least increase by only 1.4 per cent, which comprises models like Maruti Suzuki Swift, Ritz, Chevrolet Beat, Hyundai Santro and i10. More than 1,500 cc engines will experience an increase of 43 per cent in their premium.
Sources close to the development process revealed that the highest increase has been proposed in the entry level segment as the number of accidents taking place is quite high in this space. Confirming this statement, a source was quoted as saying, “The number of first-time owners is very high in this (below 1000CC) segment.” Reportedly, a number of first time car buyers are found in entry level segment. This high volume pulling segment includes models like Maruti Suzuki Alto, Hyundai Eon, Chevrolet Spark and Tata Nano. It must be noted that the third party insurance for commercial vehicles will be also increased by 30 per cent. Sources further said that the third party motor insurance is a mandate for all the vehicles, no matter private or commercial, as it covers the claim of injured party other than the car owner himself.
As per reports, this increase has been mainly proposed owing to looses sustained by the insurance companies as the accidents occur in this field are quite high, which demand a hefty amount of claims. Sometimes, the amount of claims is as high as 200 per cent of the actual amount. Sources said that the increased premium would surely minimise the vulnerability of losses being sustained by the insurance companies. Few industry experts were also quoted as saying that very soon, a surge in own damage insurance is also anticipated to take place.