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

The support will have a multiplier effect as increase in premium would have resulted into thrice the increase as buyers are now required to pay a onetime premium for three years.

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IRDAI will not increase the premium rates of third party motor insurance.

Highlights

  • IRDAI will not increase the premium rates of third party motor insurance.
  • The increase in premium rates would have had multiplier effect.
  • SIAM had requested IRDAI to not revise the premium rates.

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 ₹ 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.

Also Read: RBI's Announcement Provides 3 Months Relief From Car Loan EMIs

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."

Also Read: Coronavirus Pandemic: SIAM Welcomes Finance Minister's New Announcements

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

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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 ₹ 90,000 crore for BS6 transition and automakers were relying on sales performance to recover the invested amount.

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