IRDAI To Keep Third Party Motor Insurance Premiums Unchanged For All Vehicles In FY'21

At a time when the entire nation is fighting against the novel COVID-19 by remaining indoors and putting a stop at all non-essential outdoor...

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At a time when the entire nation is fighting against the novel COVID-19 by remaining indoors and putting a stop at all non-essential outdoor operations, the economy and industries are bearing the brunt of it. The Society Of Indian Automobile Manufacturers (SIAM) had already said that the auto industry is incurring a loss of Rs. 2300 crore per day of closure and trying that the situation doesn't worsen further, SIAM had requested the Insurance Regulatory And Development Authority of India (IRDAI) to not revise the third party motor insurance charges for FY2021. The IRDAI has accepted the submission and will be retaining its premium rate for the financial year.

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Rajan Wadhera, President, SIAM stated, "We are thankful to the Insurance Regulatory and Development Authority of India (IRDAI) for keeping the Third Party Motor Insurance Premium Rates unchanged for all vehicle categories for the Financial Year 2020-21. This is in line with SIAM's submission to IRDAI on retaining premium rates and, thereby, avoiding an increase in the cost of vehicle acquisition for end consumers."

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The increase in insurance premium would have had a multiplier effect.

In fact, the support will have a multiplier effect as increase in premium would have resulted into thrice the increase in premium. Buyers are now required to pay a onetime premium for three years. This would have suppressed consumer sentiments further at a time when it's already low given the prolonged slowdown. Moreover, people are also practicing social distancing to prevent the spread of Coronavirus and it's likely to continue even after the lockdown. The industry has invested a total of Rs. 90,000 crore for BS6 transition and automakers were relying on sales performance to recover the invested amount.

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