Monday, April 18, 2011

Third party motor insurance premium to increase by 70%

From 25th April you will have to pay an increased premium amount on your Motor Insurance policy.

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Insurance Regulatory and Development Authority (IRDA) has taken this decision. IRDA had through their exposure draft in Jan 2011 announced their suggestion of increasing the premiums on Motor Insurance by 80%. Private car and two wheeler insurance premiums will be increased by 10%. So if all these variables are calculated the actual increase in premiums is 68%.

The IRDA revises their rates every 4-5 years. And the IRDA realizes it that it puts a lot of strain on the industry. From now on they will be reviewed on an annual basis.

Insurers have been forced to create an excess provision of Rs. 3, 500 crores. But in return they have not been allowed to issue fresh policies which have been changed according to this provision or make any changes in the policies that have already been sold.

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