Insurers set to get nod to hike third-party motor premium

New Delhi: The general insurers finally got the nod to raise premium for the third party motor business, which is the most loss making portfolio for them.

“Mostly the general insurers will be allowed to go for 70-80% hike in the third party motor premium,'' said a senior Irda official

The loss out of the third party motor portfolio impact the financial position of the general insurer which have been suffering heavy underwriting losses in the past.

Though pricing for almost all business in the domestic general business can be fixed by the general insurers, third party motor premium is still regulated by a constitutional body Tariff Advisory Committee (TAC) which operates under insurance regulator Irda.

J Harinarayan, chairman, Irda will be meeting all the motor unions who have been opposing any rate hike in the third party premium on March 8 to bring about a consensus on the issue.

In all earlier...occasions politically powerful motor unions had thwarted any move by the insurance regulator to hike the third party motor premium.

However, earlier when the Irda had proposed 150% hike, motor unions had forced a change in the decision to allow a hike of only 70%. Sources said ministry of finance has allowed the Irda to effect a price hike in third party motor premium.

Minister of state for finance Namo Narain Meena said in the Lok Sabha on Friday that the government has asked the insurance regulator to implement the proposed increase in motor insurance premium as the losses could adversely affect the companies

He said the insurance companies would incur about R3,500 crore loss in the current fiscal on account of motor insurance.

If the situation was allowed to continue, there will be a severe dent on the solvency of insurance companies which could lead...