Government has proposed not to revise the annual motor third party (TP) premium and even suggested a reduction of premium in a couple of segments in FY 2023-24, which will be now implemented from August 2023.
The Ministry of Road Transport and Highways (MoRTH) came out with the new draft notification on the premium for mandatory third-party motor cover on June 14 and has preferred to retain the same level premiums in most of the categories. While the status-quo on the premium for a mandatory motor TP in FY 2023-24 may be a good news for the vehicle owners and auto industry, the decision has given a jolt to the general insurers who usually demand a hefty hike in premium in this segment to compensate the rising claims leading to the underwriting losses for the companies.
In 2022-23, the motor TP premium had gone up by 14.44 per cent to Rs 49,508 crore from Rs 43,260 crore in 2021-22. The ministry takes data provided by the Insurance Information Bureau of India (IIBI) into consideration while arriving at the Motor TP premium rates.
The claims paid data in respect of each of the accident years starting from the year 2011-12 up to 2021-22 has been considered. Besides, gross written premiums for the FY 2011-12 to 2021-22 have been considered. The status quo on TP rates will impact the cash flow of insurers, said an official.