The Insurance Regulatory and Development Authority (IRDA) reviews and adjusts the premium rates for motor third party insurance cover annually based on a set formula. The rates are determined and notificed by the Authority every financial year based on the experience measured in terms of average claim amounts, frequency and expenses involved in servicing the motor third party insurance business.
With IRDA allowing upto 20 per cent increase in third party rates with effect from April 1 in view of rising inflation and the nature of claims settlement, motor insurance will become more expensive.
It may be recalled that IRDA had reviewed and adjusted the premium rates for 2012-13 as per the order issued on March 27, 2012. It also issued an exposure draft dated February 16, 2013, on revision of premium rates for 2013-14 and invited commence/objections on the proposed rates from all the stakeholders.
As brought out in the exposure draft, in a vehicle class there is a wide variation in premium rates amongst various subclasses which were therefore clubbed together and a flat single revision was considered for the vehicle class as a whole. The rates revision for 2013-14 was done after studying the responses from different stakeholders.