Motor insurance companies are thinking of increasing the premiums of third party vehicle insurances.
As per a Zee Business report, insurance companies have already forwarded an application to the IRDAI. In this application, they have requested IRDAI to allow them to go for a price hike on 3rd party insurance. The proposed hike as per the application is by 15-20%.
The report also highlights that the car insurance companies intended to increase third party insurance premiums even before the global pandemic. However, there was a delay due to the pandemic caused by the widespread of Covid-19 in March 2020.
The insurance companies feel that the current premium prices may not help them sustain their business. Hence, nearly 25 insurers are hoping to get an approval from the IRDAI for the premium price hike.
As per insurance companies, there’s a concrete reason for this price. The reason is that the third party insurance claims have considerably increased. Rising refunds & stagnant prices of premiums have heavily impacted the revenues of insurance providers.
As per the IRDAI - 2021 Annual Report, 3rd party insurance premium contributes 25% of the total business for companies in the non-life insurance segment. The report also stated that insurance companies gathered Rs 40,000 CR in third party insurance policy premiums while they were undergoing the review period.
While the premium hike is important for insurers to sustain, it may put a big hole in the common man’s pocket.
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