Since last few years, Insurance Regulatory and Development Authority of India (IRDAI) has been on a killing spree.
It aims to kill the helpless vehicle owners with 'repeated' and 'massive' increases in the Third Party Motor Insurance premiums.
This year is no different.
IRDAI has recently announced a monstrous hike in the third party premiums applicable for the next financial year i.e. 2016-17.
As you may be aware, your car or two-wheeler should be insured on two counts.
The first is the insurance cover against damage to your vehicle. This is known "own-damage cover". Two salient features of this, damage-to-own-vehicle cover, are
a) insurance companies have the freedom to fix the premium rates for the same
b) this is an optional cover; if you feel you can bear the expenses, you need not buy this cover.
The second is the injury/death of a third person and/or damage to his/her property, caused by your vehicle. This is known as "third-party cover". Two salient features of this, damage-to-third-party cover, are
a) the premium is fixed by IRDAI
b) this cover is compulsory; if you don't have one, you will be fined.
Coming to the hike in the premiums on third party cover announced recently:
Given below are the premiums rates for cars and two-wheelers, for the FY 2016-17 and the previous three years.
As you can clearly see, every year the IRDAI has been going in for substantial jumps. (Most surprisingly, bikes of more than 350 cc has seen a drop in the premium this year, after a no-change last year).
CII(t-1) : Cost Inflation Index for the previous year i.e. ‘t-1’
C1(t) and C2(t): Parameters evaluated by IRDAI based on the average claim amounts, frequency and expenses involved in servicing third party insurance; and applicable to the financial year ‘t’
[Note: The values of the parameters C1(t) and C2(t) may vary according to the class of vehicle.]
You may also like to note that
(1) insurance companies cannot cancel the policies already in force and issue fresh policies, in lieu of the same, at the new premium rates; and
(2) these being mandatory covers, IRDAI will seriously treat the complaints where the insurance companies do not make available such covers or deny / delay the same.
It aims to kill the helpless vehicle owners with 'repeated' and 'massive' increases in the Third Party Motor Insurance premiums.
This year is no different.
IRDAI has recently announced a monstrous hike in the third party premiums applicable for the next financial year i.e. 2016-17.
As you may be aware, your car or two-wheeler should be insured on two counts.
The first is the insurance cover against damage to your vehicle. This is known "own-damage cover". Two salient features of this, damage-to-own-vehicle cover, are
a) insurance companies have the freedom to fix the premium rates for the same
b) this is an optional cover; if you feel you can bear the expenses, you need not buy this cover.
The second is the injury/death of a third person and/or damage to his/her property, caused by your vehicle. This is known as "third-party cover". Two salient features of this, damage-to-third-party cover, are
a) the premium is fixed by IRDAI
b) this cover is compulsory; if you don't have one, you will be fined.
Coming to the hike in the premiums on third party cover announced recently:
 |
| Horrifying increase in the third party insurance premiums for your vehicles. |
Given below are the premiums rates for cars and two-wheelers, for the FY 2016-17 and the previous three years.
Similar kind of massive hikes have been announced for various other types of vehicles such as Goods Carrying Public and Private Carriers, Three Wheeler Goods Carrying Public and Private Vehicles, Trailers, Motor Trade (Road Transit Risks) and various categories of vehicles used in transport of passengers.
(For those interested, the detailed list is available on the IRDAI's website at the following link: Premium Rates for Motor Third Party Liability Insurance Cover for FY 2016-17)
Naturally, there is a huge dissatisfaction and dissent among the transporters against these repeated hikes.
This big increase is despite the fact that Cost Inflation Index, one of the parameters considered in deciding the premium rates, has increased by only 5.57% in last one year.
IRDAI uses the following formula to calculate the third party premiums each year:
P(t) = C1(t) * CII(t-1) + C2(t)
where
P(t): Motor Third Party Premium applicable to the financial year ‘t’
CII(t-1) : Cost Inflation Index for the previous year i.e. ‘t-1’
C1(t) and C2(t): Parameters evaluated by IRDAI based on the average claim amounts, frequency and expenses involved in servicing third party insurance; and applicable to the financial year ‘t’
[Note: The values of the parameters C1(t) and C2(t) may vary according to the class of vehicle.]
You may also like to note that
(1) insurance companies cannot cancel the policies already in force and issue fresh policies, in lieu of the same, at the new premium rates; and
(2) these being mandatory covers, IRDAI will seriously treat the complaints where the insurance companies do not make available such covers or deny / delay the same.
