IRDA to stop fixing 3rd party insurance premium from 2021

NEW DELHI: The Insurance Regulatory and Development Authority (IRDA) has indicated that it would disband the practice of annual fixing of premium for third party (TP) insurance for motor vehicles from 2020-21. This would pave the way for insurance companies to quote their own premiums, which may bring it down because of stiff competition.
Currently, the insurance regulator announces the fixed premium for TP insurance cover, which is mandatory for every vehicle that plies on the road.The transporters have been demanding that the regulator fix the cap for premium and allow insurance companies to offer discount so that policy-buyers have greater choice.
Since there is no fixed premium for “own damage”, insurance companies offer huge discount. Insurance companies collected about Rs 50,000 crore premium for motor vehicle insurance in 2016-17, according to Insurance Information Bureau of India (IIB).
Insurance companies have been more keen to sell comprehensive insurance policies, which include both TP and own damage (OD).
Officials told TOI that de-tariffing TP premium came up for discussion last week when the Prime Minister’s Office held a meeting on the demand of truckers to roll back the steep increase in premium for the current fiscal. Truckers had gone on strike raising a host of demands including rollback of nearly 28% hike in third party premium. Then interim finance minister Piyush Goyal had assured truckers’ organisations to reduce this to 15%, which has not yet happened.
“The regulator said they can’t do anything now since eight months of the current financial year have already passed. So, there was proposal if they could limit next year’s hike to 10% or 10.5% and notify the increase early rather than waiting for March-end.”
“Why is IRDA so keen on this job? High competition in this sector will bring more benefit to vehicle-owners. There is a competition watchdog to take care of cases of cartelisation. This annual ritual should end and the focus should be to see how fast insurance claims are settled,” said S P Singh of IRTFT, a Delhi-based think tank on transport issues.