The mandatory liability-only cover on your vehicle has gone up this year by as much as 40 per cent, in the sub 1,000cc passenger vehicles (See: Rising Premium). The liability cover has also gone up for two wheelers, where the increase is by 25 per cent for bikes in the 150-350cc engine capacity, and at the same time going down by 10 per cent on bikes with over 350cc capacity.
The rationale for the steep hike according to the regulator is the increase in the cost of inflation index (CII) by 5.75 per cent in the previous year. While the inflation rate has gone up marginally, the premium rates have gone up sharply based on the data provided by Insurance Information Bureau (IIB) of India which includes number of policies, number of claims paid and amount of claims outstanding as on March 31, 2015. While a lot of detail has gone in the draft that has been published, a matter of concern looms large on several vehicles plying on roads without the mandatory cover.
Data from the recently launched e-Vahan Bima in the state of Telangana indicated that of the 84 lakh vehicles in the state, only 50 per cent were insured. The motor insurance segment of the business has been a loss making one, and several private general insurers do not issue only liability cover due to fear of high claims under this policy. To ensure that policies are issued to all vehicle owners, this move by IRDAI makes an attempt to insulate losses and at the same time encourage insurers to issue liability-only cover.
Rising Premium
