The Insurance Regulatory and Development Authority (IRDA) has proposed a draft to hike the price of third party motor vehicle insurance cover, from the 1st of April 2015.
IRDA, in the exposure draft said, "It is observed that there is a high increase in average death claim size for 2013-14 over the previous year, and the increase in average death claim size for the claims arising out of the policies issued in the years 2014-15 and 2015-16 is expected to be much higher."
The third party insurance covers other than own damage.
The third party insurance has to be purchased by a vehicle owner, to cover any collateral damage to a third party, which generally involves a human being.
T S Vijayan, the IRDA Chairman said, "General insurers have to do the third-party motor business mandatorily to the proportion of their market share. If one company has 10 percent market share, then this cover must also be in that proportion."
The insurance industry, undergoes a loss of loss of INR 7,000 to 8,000 crore every year, which impacts their overall profitability.