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Old 15th November 2017, 15:27   #1
GTO
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Default General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

In the other thread, we've been cribbing about just how expensive 3rd-party insurance has become.

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Originally Posted by GTO View Post
Just paid Rs. 9,694 for a basic 3rd-party insurance policy for my Jeep which has a book value of zero . And remember, this is 3rd party only - the insurance company has to pay nothing for accidental damage or theft.

The Jeep has never had an insurance claim in its 20 years of operation either.

This is frankly getting ridiculous. Let me show you how the rates have gone up. Below is the amount paid for my Jeep's insurance over the years:

2011: 3,282
2012: 3,493
2013: 4,134
2014: 4,904
2015: 5,915
2016: 7,464
2017: 9,694
An increase of 3X in 6 years . Now comes the news that 3rd Party Insurance is the new cash cow:

Quote:
Third party motor insurance, the segment that used to be a drag on insurers for more than a decade, has turned into a money spinner for these firms, thanks to increased premiums and motor safety norms.

General insurance companies collected Rs 26,523 crore under the third party motor segment in the last financial year while the premium collected under own damage was Rs 23,727 crore, according to the data published by insurance regulator Insurance Regulatory and Development Authority of India (Irda).
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Motor own damage policy covers losses to the vehicle arising out of accidents. Last year, Chola Insurance wrote Rs 1,243 crore of third party premium compared to Rs 922 crore of motor own damage. Shriram General insurance wrote Rs 1,247 crore third party and Rs 589 crore own damage.
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Old 15th November 2017, 15:51   #2
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

I recently paid about 3k for my 12 year old Honda City. However a 12 year old Baleno (old model not the new one) would have cost 8k or so. All because the Baleno engine is about 100cc more.
The insurance rates rise way too sharply for 1500cc and greater vehicles.
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Old 15th November 2017, 15:59   #3
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

Time to link Aadhaar with Vehicle RC, and provide differential (insurance premium) pricing based on claim history of all cars of the owner. 3rd party insurance was claimed to be a loss making segment of motor insurance a decade ago - now that it's profitable, why should safe drivers be penalized?
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Old 15th November 2017, 17:25   #4
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

Since 3rd party is mandatory (and comprehensive is optional), the insurance companies want to squeeze the owners.
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Old 15th November 2017, 18:02   #5
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

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Originally Posted by GTO View Post
In the other thread, we've been cribbing about just how expensive 3rd-party insurance has become.
Not sure if all are aware of this, but the mandatory 3rd party coverage is Rs. 6000 only.

From the Insurance Information Bureau of motor vehicle pdf.
Quote:
However, the insured can at the inception of the policy, opt to restrict to the TPPD cover to the statutory limit of Rs. 6000/- as provided in the M. V. Act. In such an event, the base TP premium applicable (before any loading/ discount ) may be reduced by Rs. 200/-, Rs. 150/-, Rs. 100/- and Rs. 50/- for Class 1, 2, 3 and 4 as above respectively.
The classes here are 1. Commercial Vehicles (other then mentioned), 2. Commercial Vehicles - taxis and three wheelers, 3. Private cars and 4. Two wheelers. (Rs. 7.5 lakh coverage for all except Rs. 1 lakh for the two wheelers)

However, I feel that with this Rs. 6,000 coverage, we may have to pay from our pockets in case the court award compensation to the other person. But I have trust in our police, courts to drag this out so much that most people are dissuaded from claiming 3rd party insurance. I'd also request mods to add a poll here asking how many of us BHPians have successfully claimed from the other guys 3rd party insurance.

Last edited by GTO : 16th November 2017 at 07:50. Reason: typo
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Old 15th November 2017, 18:10   #6
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

The reason why you are seeing rising third party insurance premiums is because courts and tribunals have been somewhat lenient in adjudging compensation to victims of accidents. Go to www.indiankanoon.org and type "motor accident claims".

General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage-claims.jpg

The compensation is based on current estimated earnings (not income tax returns) and age of the victim. Even if it is a roadside vendor who has succumbed to injuries, the compensation can even be Rs. 50 Lakhs to Rs. 1 Cr, which the insurance company is forced to shell out.

And in certain cases, the courts seem to go really overboard. Take this case for instance (order reversed by a higher court)
https://timesofindia.indiatimes.com/...w/61312577.cms

Basically, general insurance companies have been suffering losses till now. But rising third party premiums have turned the business profitable. But its not that insurance companies are minting money - the newly listed New India Assurance company had revenues Rs. 17,000 crores and profits of just Rs. 800 Cr in FY17. That's a profit margin of just 5%.

This is what the MD of New India Assurance has to say about Motor insurance claims:

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Question: Hasn’t the motor third party segment seen an improvement in terms of lower losses?
Quote:
Answer: In the motor third party segment, the premium increase that is happening every year has improved the situation. The Motor Vehicles Amendment Bill that is in the Parliament is also a positive development and is expected to bring down the number of accidents on Indian roads. This bill has also set a time limit of six months for filing claims and has a mechanism for quicker settlement of claims.
http://www.moneycontrol.com/news/bus...e-2419619.html

Last edited by smartcat : 15th November 2017 at 18:18.
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Old 16th November 2017, 09:16   #7
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

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Originally Posted by blackwasp View Post
But I have trust in our police, courts to drag this out so much that most people are dissuaded from claiming 3rd party insurance. I'd also request mods to add a poll here asking how many of us BHPians have successfully claimed from the other guys 3rd party insurance.
Here's a related thread - link (Third party insurance claims).

As you rightly said, the long court procedure & formalities are deterrents enough to claiming from someone else's 3rd-party insurance. But it is still important. If you don't have 3rd-party coverage, then the other party can come after your own assets (not to mention, it's illegal to drive without 3rd party coverage). And once they know they can come after your assets, they'll come all guns blazing.
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Old 16th November 2017, 09:28   #8
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

Quote:
Originally Posted by blackwasp View Post
Not sure if all are aware of this, but the mandatory 3rd party coverage is Rs. 6000 only.

However, I feel that with this Rs. 6,000 coverage, we may have to pay from our pockets in case the court award compensation to the other person. But I have trust in our police, courts to drag this out so much that most people are dissuaded from claiming 3rd party insurance. I'd also request mods to add a poll here asking how many of us BHPians have successfully claimed from the other guys 3rd party insurance.
Quote:
Originally Posted by GTO View Post
Here's a related thread - link (Third party insurance claims).

As you rightly said, the long court procedure & formalities are deterrents enough to claiming from someone else's 3rd-party insurance. But it is still important. If you don't have 3rd-party coverage, then the other party can come after your own assets (not to mention, it's illegal to drive without 3rd party coverage). And once they know they can come after your assets, they'll come all guns blazing.
In any case claiming of the other fellows insurance is almost a no go. There used to be a policy third party with theft, which was discontinued. I used it a lot.
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Old 16th November 2017, 09:51   #9
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Smile Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

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Originally Posted by blackwasp View Post
Not sure if all are aware of this, but the mandatory 3rd party coverage is Rs. 6000 only.
Not correct Kanad, it is not mandatory but optional. It is true that many do not know of this option coz during Insurance buying or renewal this information is not available.

The TPPD liability of the Insurers is 7.5L which we have seen ver the years come down to this amount due to the incessant payouts by the Insurance co on Motor tribunal's orders. I remember to start with the liability was unlimited, then it was restricted to 20L, then 10L and now 7.5L.

The need of the hour is fast track courts to resolve the third party claims. Until that happens, out of court settlement, heart burns, palm greasing will continue and there is a section of people which want that to continue.

In UK, I know there is a rule that in case of any collision and third party claims, the owners of involve cars do not even have to visit the courts, police stations. Everything is done by the Insurance cos and the Motor tribunals. The affected parties get their settlements online. We have a long way to reach that stage.
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Old 16th November 2017, 14:22   #10
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Default Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

Also, we have reverted to the NCB crashing to zero, in the event of a claim. So this is another disincentive to any claiming. I really do not understand why?
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Old 16th November 2017, 14:23   #11
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Smile Re: General Insurance Companies collect more 3rd-party premiums than that for comprehensive coverage

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Originally Posted by GTO View Post
To support what GTO mentioned IRDA has released the Motor TP obligations of major Insurance co. Only 9 Insurance cos have sold more Third Party insurance only policies than the Own damage Motor Insurance policies. With a surprising exception of Raheja QBE general Insurance co which is seen to have sold only TP policies Rest of the Insurance cos are seen to sell more OD policies than TP policies.

Related document attached for reference. IRDA link as below:

https://www.irdai.gov.in/ADMINCMS/cm...eNo3308&flag=1
Attached Files
File Type: pdf Data for Motor TP obligations.pdf (36.1 KB, 147 views)
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