Page 15 - Insurance Times November 2021

Cover Story

A PEEP INTO SOME

DIMENSIONS OF

MOTOR THIRD

PARTY PREMIUM

INCREASES -

2002-03 TO 2019-20

Abstract :
Third party liability insurance of vehicles is a social security mechanism designed by the modern societies to protect the
victims of road accidents. It also provides security to the owners of the vehicles. Over the years, with exponential
growth in the number of vehicles plying on the roads, the emerging scenario has acquired a dimension of huge
significance. In the past few years, the third party insurance premium rates have leap frogged. Though the rate related
data compilation has seen huge improvement over the years, yet the mystery surrounding the workings of the premium
rates is a matter of heart burning for the stakeholders. This write up is a humble attempt to analyse the reasons
behind the hefty increases in motor third party insurance premiums in India. Prima facie, the insurers become the
target of consumers ire caused by rate revisions. Worsening accident situation too, is faulted for these increases. Thus,
insurers, vehicle owners, drivers, road conditions and traffic management are at the receiving end of the flak. The
article, objectively analyses the facts to find out the true reasons behind the significant increase in premium, while
simultaneously attempting to demystify the metrics of motor third party insurance premium rating. Are we right in
faulting the insurers and the worsening accident scenario for the increasing premium rates ? The analysis might change
our perception if not totally, at least in part.

(This write up, in its analysis, uses weighted averages.
About the author Composition of vehicles (Annexure C) forms the basis for
weightage. The ratio of number of each class/category of
S H Gejji
Post Graduate in Commerce. - M.com vehicle to the total number of vehicles, is the weightage
Degree in Law. - LLB(General) assigned to respective category of vehicles. In the absence
Fellow of Insurance Institute of India - FIII of data on the composition of vehicles for the year 2019,

The Insurance Times, November 2021 15