Despite the portfolio being hugely profitable for the insurers, the motor third party liability insurance premium has been increased by the central government and it will be effective from June 1, 2022. The central government has also taken back the 15% discount on the base premium for electric vehicles possibly due to EVs going up in flames in recent times or without any fundamental claims experience data.
The three-year third-party premium for new cars and the 5-year two-wheeler premium-paid upfront at the time of buying the vehicle is higher than the one-year renewal policy. An investment income can also be earned by the insurers on the premium paid and the benefit hasn’t been passed on to the insuring public.
The following are the increased premium rates per year for more than 3-year-old cars and 5-year-old two-wheelers.
Private Cars
- Not exceeding 1,000 cc Rs 2,094
- Exceeding 1,000 cc but not exceeding 1,500 cc Rs 3,416
- Exceeding 1,500 cc Rs 7,897
Two Wheelers
- Not exceeding 75 cc Rs 538
- Exceeding 75 cc but not exceeding 150 cc Rs 714
- Exceeding 150 cc but not exceeding 350 cc Rs 1,366
- Exceeding 350 cc Rs 2,804
New Private Car – 3-year single premium
- Not exceeding 1000 cc Rs 6,521
- Exceeding 1000 cc but not exceeding 1500 cc Rs 10,640
- Exceeding 1500 cc Rs 24,596
New Two Wheeler – 5-year single premium
- Not exceeding 75 cc Rs 2,901
- Exceeding 75 cc but not exceeding 150 cc Rs 3,851
- Exceeding 150 cc but not exceeding 350 cc Rs 7,365
- Exceeding 350 cc Rs 15,117
For hybrid electric vehicles, the government has announced a 7.5% discount on premiums. According to the information conveyed by the General Insurance Council the motor insurance premium earned by the industry during 2019-20 was Rs 68,951 crore – vehicle damage Rs 26,524 cr, third party liability Rs 42,427 crore.