Third-party vehicle insurance: Insurers in distress over three-year rate pause
Subscribe to enjoy similar stories. Mumbai: General insurers issuing third-party vehicle insurance policies are grappling with rising underwriting costs as inflation and a near three-year pause on rate hikes eat into their business. India mandates third-party vehicle insurance, or liability insurance, for all motorists to cover damages or injuries caused by the policyholder to someone else.
The Insurance Regulatory and Development Authority of India, or Irdai, typically revises the premium rates for third-party vehicle insurance policies every 1-2 years under the Motor Vehicle Act. However, its last rate revision was in June 2022. India saw a temporary surge in the sales of motor insurance policies after the covid years as new vehicle sales increased.
However, the pace has since moderated, partly due to the stagnation in the policy rates for third-party vehicle insurance policies. Between April 2024 and January 2025, motor insurance premiums in India increased 8.6% on-year to ₹80,882 crore, slower than the 14% pace in the same period of 2023-24, as per a recent report by CareEdge. “There is a clear need to increase overall TP premium rates while recalibrating rates within the TP tariff sub-segments," said Mayur Kacholiya, head–motor product and actuarial, Go Digit General Insurance, calling for a “targeted recalibration".
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