Indians may have to spend more on the motor insurance premium effective 1st April, 2019. Read on to know the how, why and what of this premium hike.
Update: IRDAI through its order dated 28th March 2019 wide reference no. IRDA/NL/ORD/MOTP/051/03/2019 has extended the validity of existing premium rates beyond 3lst March, 2019, until further notice. Therefore, insurers shall continue to charge the rates currently being charged for Motor Third Party Liability lnsurance Cover from 1st April, 2019 onwards until further orders.
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to increase the third-party motor insurance premiums by around 17 to 20% in the new financial year. This would be applicable for two-wheelers, cars and commercial vehicles effective April 2019.
Why this sudden price hike for motor insurance premium?
Third-party motor insurance is mandatory for every vehicle being ridden or driven on the Indian roads. IRDAI revises this premium every year post analysing and reviewing the inflation rate and the incurred claim ratio. This hike also varies depending on your bike or car’s engine capacity and the manufacturing year.
However, policyholders will have to bear the brunt even more this year due to the long term motor insurance being made mandatory since September 2018.
From August 1st last year, The Supreme Court had made sale of Three-year third-party car insurance and five-year third-party two-wheeler insurance compulsory. This is one of the main reasons for the third-party motor insurance premium increasing by 2.86 – 3.08 times for new cars and 2.45 – 5.61 times for new bikes bought post this date.
IRDAI also projects to hike the third-party motor insurance due to losses faced by the motor insurance companies.
When will this premium hike be effective?
Last financial year, 2018-2019 faced a premium hike of 4-16% for private as well as commercial vehicles. The new third-party bike and car insurance rates will be effective from April 1st 2019 and would be intimated in the next few days.