| That
motor insurance has been a loss-making proposition in India is a well
known fact. Though whether the low insurance premiums or the inefficient
companies have been the major cause of this is debateable, the Tariff
Advisory Committee has approved of a revision in motor insurance premiums
and brought out the new motor insurance tariff policy. Based on the recommendations
of the Ansari Committee, cars and two-wheelers will now be charged on
the basis of insured’s declared value (IDV), geographical location,
age of vehicle as well as the cubic capacity of the engine.
The
concept of IDV is new and is being introduced to provide for the determination
of the sum insured for the vehicle and accessories not included in the
manufacturer’s listed selling price of the vehicle by applying a
fixed percentage of depreciation.
While Zone A comprises Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata,
Mumbai, New Delhi and Pune, Zone B will be made up of rest of India.
The tables for own damage premium are shown on the right and reflect an
increase ranging from about 30 per cent to about 50 per cent depending
on age, location and engine capacity. Again depending on all these factors
the increase in premium for a new Maruti 800 can be as high as about Rs
2,000 while for a Hyundai Sonata, the increase can work out to about Rs
10,000. There will be an additional charge for electrical and electronic
items . If the vehicle is run by CNG or LPG, again there will be additional
premium.
The other major changes are for no claim bonus the maximum of which has
been brought down to 50 per cent from the existing 65 per cent. The slabs
for a no claim bonus now start at a 20 per cent discount on premium for
own damage for no claims in the preceding year and increases to 25 per
cent for no claims in the preceding two years, 35 per cent for three years,
45 per cent for four and a maximum of 50 per cent for five years. However
there is a sunset clause which provides protection for continuation of
a maximum of 65 per cent discount if the customer is entitled a no-claim
bonus of 55 or 65 per cent in terms of present tariff on any renewal falling
between July 2002 and June 2003.
The cover for third party damage can be now a maximum of Rs 7.5 lakh (Rs
6,000 if the insured opts to limit third party damage to the statutory
limit) in respect of any one claim or series of claims arising out of
one event. If at the insured’s option, the expiring third party
damage cover stands limited to the statutory limit, an additional premium
of Rs 100 is to be charged for changing the cover to Rs 7.5 lakh on renewal.
An inbuilt personal accident cover of Rs 2 lakh (one lakh in the case
of two-wheelers) has been provided for the owner-driver. One can however
opt for unlimited third party cover on payment of additional premium.
There are a number of discounts that one can avail of based on the installation
of anti-theft devices as well as for membership of recognised automobile
associations. There is also a discount for vintage cars certified by VCCI.
Voluntary deductions can also be opted for to economise on outgoing premium
and these have been listed out in slabs ranging from Rs 2,500 to Rs 15,000
with the discounts ranging from 20 to 35 per cent over this range. In
the case of two-wheelers the voluntary deduction ranges from Rs 500 to
Rs 3,000 with the discount on premium ranging from 5 to 25 per cent over
this range. An additional discount for a side car is available to two-wheeler
insurers in addition to the one available for four-wheelers.
There are separate schedules for insurance for participating in rallies
in India as well as for trailers.
With this rise in motor insurance premiums it is hoped that not only will
there be more players in this field but there will also be a marked improvement
in the services being offered because of increased competition. Players
who had earlier found motor insurance to be unprofitable might now return
to the business. Over and above one might witness a great number of deals
as well as offers with safe drivers being rewarded and the insurance premium
being more linked to the driver than to the car.
| RATES
OF PREMIUM FOR OWN DAMAGE COVER FOR PRIVATE CARS |
| Age
of the vehicle Zone B Zone A |
ZONE
B |
ZONE
A |
| CUBIC
CAPACITY |
CUBIC
CAPACITY |
| not>1000cc |
>1000cc
not>1500cc |
>1500cc |
not
> 1000cc |
>1000cc
not>1500cc |
>1500cc |
| Not
exceeding 5 years |
3.039%
on IDV |
3.191%
on IDV |
3.343%
on IDV |
3.127%
on IDV |
3.283%
on IDV |
3.440%
on IDV |
| Exceeding
5 years but not exceeding 10 years |
3.191%
on IDV |
3.351%
on IDV |
3.510%
on IDV |
3.283%
on IDV |
3.447%
on IDV |
3.612%
on IDV |
| Exceeding
10 years |
3.267%
on IDV |
3.430%
on IDV |
3.594%
on IDV |
3.362%
on IDV |
3.529%
on IDV |
3.698%
on IDV |
| PREMIUM
RATES FOR OWN DAMAGE COVER FOR TWO-WHEELERS |
| Age
of the vehicle Zone B Zone A |
ZONE
B |
ZONE
A |
| CUBIC
CAPACITY |
CUBIC
CAPACITY |
| not>150cc |
>150cc
not>350cc |
>350cc |
not
> 150cc |
>150cc
not>350cc |
>350cc |
| Not
exceeding 5 years |
1.676%
on IDV |
1.760%
on IDV |
1.844%
on IDV |
1.708%
on IDV |
1.793%
on IDV |
1.879%
on IDV |
| Exceeding
5 years but not exceeding 10 years |
1.760%
on IDV |
1.848%
on IDV |
1.936%
on IDV |
1.793%
on IDV |
1.883%
on IDV |
1.973%
on IDV |
| Exceeding
10 years |
1.802%
on IDV |
1.892%
on IDV |
1.982%
on IDV |
1.836%
on IDV |
1.928%
on IDV |
2.020%
on IDV |
|
July
2002