Business Daily from THE HINDU group of publications
Wednesday, Dec 06, 2006

Cross Currency

Group Sites

Home Page - General Insurance
Money & Banking - Outlook
Car insurance premiums poised for sizeable drop

N.S. Vageesh

Insurers gear up for free price regime from January

What's ahead
A reduction of 10-15 pc in car, two-wheeler rates, says National Insurance CMD.
Fire premiums could come down, mediclaim may rise, says ICICI Lombard MD

Chennai , Dec. 5

Motorcar owners and two-wheeler owners can look forward to lower insurance premiums in the next year. Your premium payments can go down by 15 per cent compared to what you had incurred this year.

These cuts can happen when the general insurance industry moves to a free price or de-tariffed regime from January 2007. Motor insurance premium collected by the industry is estimated to touch Rs 10,000 crore in the current fiscal.

In the normal course, a free price regime that gives companies the flexibility to charge premiums that reflect the risks being taken on, after a spell of regulatory suppression, would see rates going up.

But competition among the 13 players in the general insurance industry as well as a cautious approach could see rates remain stable or go down. Till now, companies provided motor insurance according to the tariff laid down by the regulators.

Motorcar premiums

Motorcar premium rates in India are already said to be among the lowest in the world. Compared to the insurance rates of about 7 per cent of sum insured, premium rates here are only about 3 per cent of sum insured.

For instance, a Maruti Alto car costing about Rs 3 lakh would incur an insurance premium of about Rs 10,000 per annum.

With just a little over three weeks to go for a new era to begin, what are the expectations of these companies on how rates will move?


Mr V. Ramasaamy, Chairman and Managing Director, National Insurance Company, told Business Line that "We expect an average reduction of 10-15 per cent in car and two-wheeler insurance rates. The loss ratio in these two segments is still favourable. But in the case of commercial vehicles and passenger buses, the ratio is unfavourable and rates need to go up.

However, this would depend on whether the IRDA would allow us to increase rates and load, based on the past claims experience."

While pointing out that it was difficult to make a general statement on the direction of premium rates, Mr Sandeep Bakshi, Managing Director, ICICI Lombard General Insurance Company, said, "We do not expect to see a significant variation in motor and miscellaneous categories in the initial stage.

The fire premiums could come down and the marine and group health premiums could increase but in all the cases, we do not expect any sharp variation and expect it to be in the range of 20 per cent. De-tariffing has always led to the growth of the market opportunity and we look to the future with optimism."

More Stories on : General Insurance | Outlook | Cars

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page


Stories in this Section
Booming retail sector: Toys industry sees ripple effect

Govt mulls 74 pc FDI in some aviation segments
TRAI proposes `carbon credits' for telcos
Taxiing delays taxing airlines
Ban on pulses export can only be prospective: SC
Rig deployment delay at Reliance gas field; `back-up ready'
FDI in education: Demand may go up for NRI teachers
Work begins at Dell facility near Chennai
Car insurance premiums poised for sizeable drop
Banks cut back lending to realty, retail sectors
Indian cos get more to buy property abroad
Investors move away from small savings
Sensex crosses 14k intra-day
Sensex story: From 13K to 14K in 26 sessions
Maruti watched for fundamentals
Rural business hubs will get adequate funding: PM
Tata Power to make Defence products
Large retail: Average consumer spend doubles in last 2 years

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line