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General insurers are concerned over the delay in notification of the revised motor third party (TP) premium rates for 2025-26. So, insurers are collecting premiums announced last year.

If the new rates turn out to be higher, insurers risk incurring a loss, whereas if they are lower, it will be a loss for customers who have already purchased the cover.

The mandatory motor third-party cover rates are announced annually after a consultation between the Insurance Regulatory and Development Authority of India (IRDAI) and the Ministry of Road Transport.

When contacted, a senior IRDAI official said the ball was in the government’s court and it was for the Ministry concerned to come out with the final notification after the regulator’s recommendations.

“The rates of the current financial year were supposed to be announced in the last week of March before the end of the financial year to facilitate applicabilityof new rates from the new financial year,that is, April 1, 2025.

“The delay, which could be driven by the Ministry of Road Transport,is raising concern as we are expecting 10-15 per cent hike in premium for certain categories of vehicles,” the MD and CEO of a private general insurer told businessline.

Over the last five years, the increase in third-party premium rate has been in the range of 2-4 per cent.

mounting losses

“In the context of escalating claim costs and third-party award rates, the industry is incurringlosses. This will also impact solvency ratios. We expected the announcement at least in the first week of this month, but itdid not happen,’‘ he added.

According to Head of Underwriting of another insurer, there should be clarity even in the case of a decision to continue with the existing rate as it helps the insurers brace for financial impact as there are expectationof a hike in premium.

for a balance

In view of the surge in road accident cases, it is all the more important to ensure the industry’s financial health while concerns over victims’ social security is equally important, said a senior official of a public sector general insurer.

According to the Motor Vehicles Act, third party motor insurance provides financial protection for those injured or whose property is damaged in an accident.

It ensures that victims receive compensation for their injuries and property damage.

The industry also sees an urgent need to increase the premium for certain categories of goods/commercial vehicle segments where there has been no increase in three years, said a senior official of a public sector insurer.

Published on April 22, 2025