New India keen to hike 3rd-party motor insurance rates
15 Mar 2014
State-owned New India Assurance Co Ltd, the biggest player in motor insurance, said on Friday it is awaiting a "final decision" from the Insurance Regulatory Development Authority (IRDA) to raise the cost of third-party motor insurance to curb mounting losses in this particular business segment.
"We are awaiting a final decision from the regulator," New India Assurance chairman and managing director G Srinivasan told reporters in Chennai. "What we are looking at is break-even."
Third-party motor insurance is probably unique to India – it compulsorily covers damage to third parties in case of an accident, but not the insured vehicle itself. This form of insurance is popular with goods transporting companies and with two-wheeler owners, as it is much cheaper than comprehensive insurance.
Earlier this year, IRDA released an exposure draft in which it proposed an increase in the premium for third-party motor cover for 2014-15.
The regulator has sought an increase of 25-137 per cent to attain break-even in this segment. New India Assurance has suggested that there has to be a 50-per cent rise to attain break-even in this segment.
"Goods-carrying vehicles and the commercial vehicle industry has seen a downward trend in the last two ears. The industry has lost thousands of crores," he said.
The company's total exposure in the third-party segment was about 10 per cent (including commercial vehicle industry), he said.
Asked on his plans for the third-party motor segment, he said, "We need to get back our losses. We need to wait and see."