Third-Party Motor Insurance rates to be hiked from April 1

Thanks to BHPian M35 for sharing this information.

The Insurance regulatory and Development Authority (IRDA) has decided to raise the premium rates for third-party motor insurance. The hike will come into effect from April 1, 2014.

The reviewing and raising of insurance premium rates by the IRDA has been an annual process since 2011. The organisation uses the following formula for calculation of insurance rates:

P(t)=C1(t)*CII(t-1)+C2(t) , where P(t) is the motor TP premium applicable to the financial year 't', CII(t-1) is the Cost Inflation Index for the year 't-1' and C1(t) and C2(t) are parameters applicable to financial year 't' whose values shall be determined and notified by the Authority in each financial year based on the experience measured in terms of average claim amounts, frequency and expenses involved in servicing the motor TP business. The values of the parameters C1(t) and C2(t) may vary according to the class of the vehicle.

The Cost Inflation Index has gone up by 10.21% from 852 in 2012-13 to 939 in 2013-14.

The revision has seen the premium rates for TP motor insurance for private cars climb in the following pattern:

• Private cars under 1000 cc - Up from Rs. 941 (April 1, 2013) to Rs. 1,129 (April 1, 2014)
• Private cars over 1000 but under 1500 cc - Up from Rs. 1110 (April 1, 2013) to Rs. 1332 (April 1, 2014)
• Private cars over 1500 cc - Up from Rs. 3,424 (April 1, 2013) to Rs. 4,109 (April 1, 2014)
• Two-wheelers under 75 cc - Up from Rs. 414 (April 1, 2013) to Rs. 455 (April 1, 2014)
• Two-wheelers over 75 cc but under 150 cc - Up from Rs. 422 (April 1, 2013) to Rs. 464 (April 1, 2014)
• Two-wheelers over 150 cc but under 350 cc - Up from Rs. 420 (April 1, 2013) to Rs. 462 (April 1, 2014)
• Two-wheelers over 350 cc - Up from Rs. 804 (April 1, 2013) to Rs. 884 (April 1, 2014)

Source: IRDA