The Insurance Regulatory and Development Authority of India (IRDAI) has issued a draft notification with the third-party motor insurance premium rates for cars, two-wheelers, electric vehicles and other transport vehicles for the financial year 2022-23
The IRDAI has not changed the tariffs in the last two fiscal years (FY 2020-21 and FY 2021-22). As a result, the rates set by Irdai for FY 2019-20 have remained unchanged until today
There is a suggested discount on some vehicles that will encourage people to drive environmentally friendly cars.
The following are the suggested Motor Third Party Premium rates for FY 2022-23 for various vehicle categories/subcategories, which will take effect on April 1, 2022.
Source: IRDAI
Basic Methodology
- According to IRDAI draft notification, “Paid claims data has been considered for construction of cumulative paid claims triangle for each homogenous subclass with Accident Year (AY) as origin year and Financial Year (FY) as development year.
- In order to arrive at the premium rates, the ultimate claims cost of respective segment for each accident year has been estimated using the actuarial technique of Basic Chain Ladder Method.”
Discounts available
- Electric private cars, electric two-wheelers, electric goods-carrying commercial vehicles, and electric passenger-carrying vehicles are all eligible for a 15 percent discount.
- Hybrid Electric Vehicles would get a 7.5 percent discount on Motor TP premium charges. This will act as a motivator for people to drive eco-friendly vehicles.
- Private cars registered as Vintage Cars are eligible for a 50 percent discount on the charge based on the former Indian Motor Tariff (IMT).
Abhilasha Singh, Lead – Affinity Partnerships, Riskcovry said that the rise in third party claims has prompted this move along with zero revision in rates over the past two years due to the pandemic. The increase in rates will impact customers across the spectrum. Third party premium as a component is part of both comprehensive as well as third party liability policies. There is an additional discount offered to passenger and commercial EV / Hybrid vehicles to increase adoption of environmentally friendly technology. Most importantly it will help form a stable pool of premium for third party claims which are often delayed or stuck in legal processes.