Exclusive: Big relief for new vehicle buyers! No hike in third party insurance premiums!

In a big and exclusive breaking news, Zee Business’ Anurag Shah revealed to Managing Editor Anil Singhvi today that third party insurance for motor vehicles is not likely to rise in near term. This would be a big relief for new vehicle buyers as every year, the premiums rise as much as 20-30 per cent, Shah said. The news also brings relief to automobile companies. 

Shah said that the proposal to increase the premium by 10-20 per cent for the financial year 2020-21 (April-March) has been put on hold. The premium may not likely increase for the first 6 months of this financial year or may be for the entire year, he further said, quoting sources. Insurance is mandatory for vehicle owners under the Motor Vehicles Act.

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#ZBizExclusive | ऑटो कंपनियों और नई गाड़ी खरीदने वालों के लिए राहत की खबर...अभी नहीं बढ़ेगा थर्ड पार्टी इंश्योरेंस प्रीमियम

> FY20-21 के लिए प्रीमियम में 10-20% तक बढ़त का था प्रस्ताव#AutoInsurance #Insurance @AnilSinghvi_ @anuragshah710 pic.twitter.com/CZ7zic8CLi

— Zee Business (@ZeeBusiness) July 20, 2020

 The third party insurance renewal saw a dip of about 50 per cent for the April-May months - one of the main triggers for this move, Shah said. Even in the June month, the renewals were down by 30 per cent.

In view of the lockdown, accident claims by insurance companies have not been received and they have conveyed this to the regulator. The insurance companies have told IRDAI (Insurance Regulatory and Development Authority of India)  that if insurance premiums are increased now, people may not even renew their third party insurances now.

Therefore, Shah said that the insurance regulator has put the decision to increase third party premiums on hold for now. 

However, though this may temporarily give some benefit to the insurance companies, in the long run they may come under extreme pressure as the third party premium is given on a long term basis.

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The vehicle owners have to pay for third part insurance for 3 years on buying four wheeler. Two wheeler buyers are required to pay insurance premiums for 5 years.