Third Party Vehicle Insurance: Motor Third Party (TP) Insurance Premium may soon be expensive. IRDAI has proposed to increase the premium. If this happens, insurance of cars and vehicles will become expensive. The Insurance Regulatory body has been recommended by the Insurance Regulatory Regulatory and Development Authority of India i.e. IRDAI to an average of 18% in the third party premium to the Ministry of Road Transport and Highways (MORTH). This increase in some categories can range from 20% to 25%.
Why is this increase?
Third party insurance is used in a situation when a third person is harmed due to the car. This insurance is mandatory in India, but there has been no increase in it for the last four years, while insurance companies have been suffering heavy losses in this segment.
According to sources, the motor third party insurance was about 60% of the total motor insurance premium in FY25 and 19% of the total premium of the entire General Insurance Industry.
How much loss to insurance companies?
The los ratio for insurance companies, that is, the premium taken, it remains quite high in how much amount given in the amount. The TP Loss Ratio FY25 of the government company New India Assurance was 108%, ie more than the premium. Private companies like Go Digit and ICICI Lombard stood 69% and 64.2% respectively. Therefore, insurance companies are constantly demanding that the TP premium be updated from time to time to cover medical expenses, compensation given by courts and covering the weight on the roads on the roads.
What will happen next?
The government can take a decision on this in the next 2–3 weeks. After the decision, a draft notification will be issued, in which opinion will be taken from the general public and all the concerned parties. After this, a final decision will be taken.
Experts believe that if the TP premium increases by up to 20%, then the underurighting Profitability of the insurance industry can improve by 4–5%.
Third party insurance rates have been frozen for four years, while the cost and claim have increased. In such a situation, the government is likely to decide to increase the premium in the coming weeks. If this happens, the vehicle owners will have to pay a little more for the insurance of the vehicle.
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