Government finally greenlights long awaited motor third party rate hikeICICIGI - 1252 Change: 0.65 (0.05 %)
News:The Union Road Transport Ministry has proposed an increase in the third-party motor insurance premium for various categories of vehicles, which is likely to jack up insurance cost of car and two-wheelers from April 1. With this draft rule, the rate hike for private cars is around 1-6%, for two-wheelers it is around -5.1% to 20.7%, for CV it is around 1% to 6.5%. A discount of 15% is proposed for electric private cars, electric two wheelers, electric goods carrying commercial vehicles and electric passenger carrying vehicles. Further, a discount of 7.5% on motor TP premium rates for hybrid electric vehicles is proposed.
Views: This move comes as positive for ICICI Lombard, which was struggling in motor Insurance partly due to macroeconomic factors. The overall loss ratio for the industry was at 93%, which can now be expected to cool down a bit as rate hike may improve profitability. However, this also needs to be looked through competitive intensity in the industry, as currently the industry has many aggressive insurers