Insurers seek more hike in auto insurance premium
The 10-15 per cent average hike in third-party motor premium by the regulator is not sufficient to cover the losses and therefore the claim ratio will stay high, say industry officials.
"The average hike of 10-15 per cent by the regulator IRDA is not enough to cover higher claims in this segment," Future Generali India Insurance chief executive KG Krishnamoorthy Rao told PTI.
He said the claim ratio is likely to stay in the range of 140-150 per cent in this segment despite the premium hike.
The regulator IRDA has raised the third-party motor premium by 10-15 per cent, effective April 1, against a demand for a minimum 50 per cent increase by the industry.
The third-party motor insurance, premia of which is regulated by IRDA, is one of the loss making segments and the industry has been constantly demanding for higher premia to cover the mounting losses.
A Tata AIG General Insurance official said insurers will take up this issue with the General Insurance Council and will approach the regulator for reconsideration.
"We will take up this issue with the General Insurance Council and approach Irda for reconsideration," Tata AIG General Insurance chief executive K K Mishra said, adding that the loss ratios will remain high despite the hike.
He added that after raising the provisioning (the amount of money general insurers need to set aside to meet the high level of claims) to 210 per cent of the claims from 145 per cent last year, premium rates should be more.
ICICI Lombard General Insurance chief (Underwriting and Claims) Sanjay Datta said, "The increase in the third-party premia will have limited impact on private car and two-wheeler customers since third-party premium constitutes a small component of the total premium."
The rate increase is a prudent attempt to maintain the balance between the need to increase rates given the rise in claims and impact on customers, Datta added.