Business
Small car third party premium will be higher than bigger cars from April
Chennai, March 10
The Indian insurance
regulator on Tuesday proposed a steep 107.79 percent hike in third party
insurance premium for small cars (less than 1,000cc) while reducing
rates for some categories of trucks from April onwards, according to an
exposure draft.
Simply put, owners of Tata Nano will be paying
Rs.426 more as third party premium than the owners of Tata Bolt - both
from Tata Motors.
The premium increase for two wheelers ranges
between 14-32 percent for vehicles with engine capacity of 75-350cc
whereas there is a decrease of around 61 percent in premium for vehicles
with engine capacity over 350cc.
In the case of trucks (public
carrier), third party premium has been proposed to be reduced by around
14 percent for vehicles with a gross vehicle weight (GVW) not exceeding
7,500kg and 20 percent for vehicles with GVW of over 7,500kg but less
than 12,000kg.
According to Insurance Regulatory and Development
Authority of India (IRDAI), the average compensation paid as death claim
is going up.
For the year 2012-13, the average death claims paid were Rs.545,174 and for 2013-14 the number was Rs.609,152.
The
IRDAI said the death claim size on policies issued during 2014-15 and
2015-16 that would be settled over next 8-10 years is expected to be
higher.
Interestingly IRDAI has arrived at the average, taking
into account the number of claims paid over Rs.100,000 and not those
claims where the settlement is less than Rs.100,000.
Furthermore,
IRDAI has not taken into account the investment income earned on the
third party premium earned and also on the amount set aside towards
claims reserve during the long pendency of the claim.
Reacting to
the proposals K.V. Lakshmanan a private sector employee said: "India is
the largest market for small cars and two-wheelers. Further the owners
do not have collective voice. It is an easy target segment for insurers
to hike the premium and reap a bumper harvest."
The insurance regulator has called for comments on the proposals from stakeholders by March 20, 2015.