Motor Insurance Premium Rates for Third Party Liability Only Cover
The Authority refers to the Exposure Draft on Review of Motor Insurance Premium rates for Third Party Liability Cover dated 4th January 2011, which was published in its website. Subsequently on receiving responses on the exposure draft, the Authority held series of discussions with the Transporters’ Associations and Insurers.
By virtue of the power vested in the Authority under Section 14(2) (i) of the IRDA Act, 1999, it is hereby notified that with effect from 25.04.2011, the rates of premium applicable to Motor Third Party Liability Insurance business shall be as set out in Annexure-I to this notification. The Authority has noted that Motor Third Party premiums were revised in the past at 4/5 year intervals. Such long intervals between rate revisions cast an avoidable strain on policyholders as well as on the insurance companies. Premiums need to be reviewed regularly depending upon the average claims which have been awarded by the various courts, frequency of claims for each class of vehicle and inflation amongst other factors. During the consultation process, certain stakeholders had also suggested that an annual review would ease the burden of adjusting to changes in premia consequent to changes in these financial parameters.
Having regard to the above, after extensive statistical analysis of data for all classes of vehicles, the Authority has arrived at a formula for the revision of rates based on settled parameters as set out in Annexure-II. The parameters built into the formula are i) average claims cost for each class of vehicle (ii) frequency of claims for each class of vehicle and (iii) Cost Inflation Index for the year of review.
Based upon the formula as set out in the Annexure II, the premiums would be reviewed and adjusted annually.
Insurers are advised to be mindful of the concerns expressed by vehicle owners about both the rates and availability of insurance. Considering the mandatory nature of Motor Third Party Insurance, insurers are advised to ensure that Motor Third Party Insurance is made available at their underwriting offices and that requests for insurance are processed expeditiously and policies are issued promptly. The Authority will treat any complaint of non-availability of insurance or use of methods to deny/delay the client seeking insurance cover, seriously.
Insurers are not permitted to cancel the current insurance policies and issue fresh policies to effect new premium rates.
This Notification as well as the enclosed schedule of premium rates shall be prominently displayed on the Notice Board of every underwriting office of the Insurers where it can be viewed by the public.
This Notification is issued in supersession of the Authority’s earlier Notification Ref: 043/IRDA/De-Tariff/Jan-07 dated 23rd January 2007.
(J. Hari Narayan)