Mumbai: Disappointed by moderate hike allowed by the regulator IRDAI in third party motor premium, effective from today, general insurers may hike premiums in other classes of business to compensate for it.
The insurance regulator has increased the premium price in the range of 14-15 percent for the current fiscal against the industry's demand of 40-50 percent.
The general insurers feel that this moderate hike would not take care of the mounting losses in the portfolio.
At present general insurers on an average are forced to pay Rs 140-150 against a premium of Rs 100.
"Keeping in view the losses that the industry is suffering under the segment the current premium hike will not be sufficient to offset the loss ratio," Tata AIG General Insurance chief executive K K Mishra told PTI.
Motor third party is the only segment in the non-life insurance industry whose tariff is fixed by the IRDAI.
"The hike is quite modest. The claims are rising as courts are awarding higher compensation which is increasing at an annual rate of 20-25 percent," Reliance General Insurance chief executive Rakesh Jain said. "Hence we are looking at increasing the premium amount in other lines of business."
New India Assurance general manager and director Sanath Kumar said, "We have been demanding premium hike in the range of 40-50 percent."
Asked to comment on the impact on the general insurers' balancesheet, Mishra said in the long run, losses out of third party motor portfolio will stress the underwriting health of the industry.
"It's good that premium under the third party motor are going up as it will take care of some part of our otherwise liabilities," National Insurance Company chairman and managing director PJ Joseph said, adding that "we may have to look at increasing the premium price across other lines of business to compensate the losses."
Keeping the consumer sentiment in mind, despite proposing higher hikes in the initial draft, Irdai only allowed marginal hike in the third party motor premium. In its draft report early March, Irdai had proposed a hike in the range of 14-108 percent from April 1.
