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Old 2nd August 2012, 12:02   #1
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Thumbs down PSUs may raise motor insurance premium by 40%

PSUs likely to raise motor insurance premium according to new directives given to them by the finance ministry. The raise can be in the regions of 30-40%.

Quote:
The finance ministry has asked state-owned general insurers to devise new marketing strategies and raise premiums to minimise their third party motor insurance losses, which could cause a hefty increase in motor insurance costs.

The losses of the state-run general insurance companies added up to Rs 6,134 crore during 2011-12, a significant chunk of it coming from motor insurance portfolio. The ministry has asked state-run insurers to re-price their comprehensive motor insurance policies so that the combined ratio including claims and commission does not exceed 100%, or the premium covers the cost of providing the policy.

Source:PSUs may raise motor insurance premiums by 40 per cent - The Economic Times

Last edited by GTO : 2nd August 2012 at 14:01. Reason: Keeping fair usage practices in mind, it is best to include an excerpt + link to full article
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Old 2nd August 2012, 14:34   #2
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Default Re: PSUs may raise motor insurance premium by 40%

It is high time they did. They have been milking hapless Comprehensive Insurance Holders for ages - reduction of max NCB to 50%, total loss of NCB for any claim instead of two years, doing away with TPFT, and so on. All for cross subsidising third party cover holders.
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Old 3rd August 2012, 16:09   #3
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Default Re: PSUs may raise motor insurance premium by 40%

The Third Party Insurance Charges were 67 % from April 2011. From April 2012, they have increased further, about 15 % on premium and also on service tax, about 30 %
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Old 19th February 2013, 11:12   #4
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Default Re: PSUs may raise motor insurance premium by 40%

It's a shocker..wont you say that. If the commercial vehicles third party claims are the primary reason..why this across the board hike.. phew.. my 1600 CC car is due for insurance renewal in April itself ..

http://timesofindia.indiatimes.com/b...w/18567844.cms
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Old 19th February 2013, 11:28   #5
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Default Re: PSUs may raise motor insurance premium by 40%

Its fair to help protect the industry but then they need to incentivise people for good

driving habits as well.

a) Timely insurance renewal

b) No recorded driving offenses (for that though you'd need a nation wide DL register database)

c) Not involved in accidents

d) Number of drivers driving the same vehicle

e) No prior claims

Just some offhand pointers that come to mind. If you include such analytical points, it'll appear fair for all concerned parties. But on the face value per se, it appears totally wrong.
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Old 19th February 2013, 12:01   #6
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Unhappy Re: PSUs may raise motor insurance premium by 40%

Although weighted average rise across all subclass of private vehicles is 38%, it is shocking to know that the vehicles between 1000 to 1500 cc have to pay lesser hike in TP rates whereas the firt time car owners in less than 1000cc vehicles will be the worst hit followed by those above 1500cc. Which brings to the question that whether the claim nos and the amount in the class 1000 to 1500 cc is so less that the other subclasses? Cant agree to this. Below is the basis of the calculation and the attached file gives the details

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As per the Authority’s order no. IRDA/NL/NTFN/MOTP/066/04/2011 dated 15th April 2011, the Authority would review and adjust the premium rates for motor third party insurance covers annually based on the formula as given hereunder
P (t) = C1 (t) * CII (t-1) + C2 (t)
Where
P (t) is the motor TP premium applicable to the financial year ‘t’,
CII (t-1) is the Cost Inflation Index for the year ‘t-1’ as notified by CBDT, and
C1 (t) and C2 (t) are the parameters applicable to the financial year ‘t’ whose values shall be determined and notified by the Authority in each financial year based on the experience measured in terms of average claim amounts, frequency and expenses involved in servicing the motor TP business. The values of the parameters C1 (t) and C2 (t) may vary according to the class of vehicle
Attached Files
File Type: xlsx Annexure_II_Premium-16.2.13.xlsx (15.4 KB, 242 views)
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Old 19th February 2013, 12:32   #7
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Default Re: PSUs may raise motor insurance premium by 40%

Quote:
Originally Posted by ghodlur View Post
Which brings to the question that whether the claim nos and the amount in the class 1000 to 1500 cc is so less that the other subclasses? Cant agree to this.
That's precisely the point. If, on the face of it, these calculations have been arrived at based on fine study of data to moderate loss ratio I am all for paying the increased premium. But then, I would want to be privy to the information and see if the increase in-line with the what data analysis has presented cutting across class / category / ownership right down to the inviduals history advantages as mentioned by gentleman above.
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Old 19th February 2013, 13:09   #8
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Unhappy Re: PSUs may raise motor insurance premium by 40%

Quote:
Originally Posted by New.Novice View Post
If, on the face of it, these calculations have been arrived at based on fine study of data to moderate loss ratio I am all for paying the increased premium. But then, I would want to be privy to the information and see if the increase in-line with the what data analysis has presented
Pls find the link to the IRDA where the draft for the revision of the TP rates is put up.
http://www.irda.gov.in/ADMINCMS/cms/...age=PageNo1881

The data used for working the rate revision is from the underwriting years 2007 to 2011 although the attached file for the factual data only talks about for 2007-08 & 2008-09
Attached Files
File Type: xlsx Annexure_I_Factual_Data-16.2.13.xlsx (21.0 KB, 120 views)
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