The motor third-party insurance premium rates for the financial year 2023 may be revised soon. Premiums for fossil fuel vehicles to go up but there is a 7.5 per cent discount for hybrid electric vehicles. There is a discount for fully electric vehicles too
The Insurance Regulatory and Development Authority of India (IRDAI), along with the Ministry of Road Transport And Highways, has released a draft notification for revising the third-party premium rates for motor insurance policies for the financial year 2022-2023. This proposed revision was stalled for the last two years due to the Covid pandemic.
As per the revised rates, private cars with 1,000 cubic capacity (cc) will attract rates of Rs 2,094. Similarly, private cars with 1,000 cc to 1,500 cc will attract rates of Rs 3,416 while those above 1,500 cc private cars will see a premium of Rs 7,897. Two-wheelers over 150 cc but not exceeding 350 cc will attract a premium of Rs 1,366 and for two-wheelers over 350 cc the revised premium is Rs 2,804.
For public goods carrying commercial vehicles, the premium will range from Rs 16,049 to Rs 44,242 depending on the gross vehicle weight. For the private ones, the premium will range from Rs 8,510 to Rs 25,038.
The three-year single premium for new private cars has been revised and will attract premium in the range of Rs 6,521 to Rs 24,596. Similarly, the five-year single premium for new two-wheelers will attract a premium of Rs 2,901 to Rs 15,117, depending on their cubic capacity.
“This was an expected move as third-party rates had not been changed for the past two terms. The increase is across the spectrum from cars and two-wheelers to commercial vehicles. While third-party premium rates are revised on an annual basis by IRDAI, these were put on hold in 2020, and then again in 2021, to give relief to policyholders during the pandemic,” says Ashwini Dubey, head- motor renewals, Policybazaar.com.
However, with the rise in the number of third-party claims after the initial drop during Covid, reinsurer GIC had written to IRDAI, proposing the mandatory increase in third-party rates, which has now been accepted. “This will lead to an increase in insurance premiums for both comprehensive and third-party policies as the latter is also a part of comprehensive policies. Since third-party insurance is mandatory by law, the increase will impact all customers,” says Dubey.
Customers who wish to avoid an increase in premium can renew their policies before the new rates become effective on April 1, 2022, adds Dubey.
The draft notification has proposed a 15 per cent discount for electric private cars, electric two-wheelers, electric goods carrying commercial vehicles and electric passenger carrying vehicles. The proposed discount is expected to incentivise usage of environmentally friendly vehicles. Electric private cars will attract a premium of Rs 1,780 to Rs 6,712 depending on their capacity expressed in kilowatts. Similarly, two-wheeler electric vehicles will attract premiums in the range of Rs 457 to Rs 2,383. Also, hybrid electric vehicles will attract a discount of 7.5 per cent on the motor third-party premiums.