Motor Insurance 867 views April 24, 2020

Why Motor Third Party Insurance Premium Growth Falls

Safeguarding the protection of your treasured assets is your greatest worry. These assets can be your recently bought home, car, bike, precious metals like gold, silver, etc. All these items can be secured in some way or the other. And here general insurance steps in.

Amongst several General Insurance products vehicle insurance is the most important insurance which is brought by almost all the families in India, be it a four-wheeler or two-wheeler. General insurers India that offer comprehensive vehicle insurance plans to give coverage to their vehicles.

Car Insurance and its types

Car Insurance can generally be classified into two categories which are:

  1. Third-Party Liability: Here, the insured individual gets the coverage for the loss or damages that occurred to a third-party with no cover for any loss or damage to the policyholder.
  2. Comprehensive Plans: It gives coverage to both third-party liabilities together with the insured. And also, wide-ranging coverage to your vehicle.

Insurance business in India is growing day by day and General Insurance contributes to a great percentage in terms of overall growth in insurance in India. Motor Insurance, although most demanded business in India, has seen a fall in the overall business with respect to the third-party premium business.

Recent Data- Motor Insurance

The growth in general business in India seems to have slackened down from 11%-18% in the last 5 months and has shown a weak growth of 6% as of December 2019 diminishing from a 15%-20% growth which was observed during the time frame of September 2019 till October 2019. There are two reasons primarily which have been identified, one being the decelerated growth in the third-party motor insurance and second, being the slowing down in the insurance business against fire. While the former shows an up 3% year on year as against 10%-38% year on year for the last five months, the later showed a down 10% year on year as against a year to date growth of 34% for the financial year 2019-2020. Although it was assumed that with the introduction of the new traffic fines, there will be more and more increase in the third-party insurance premiums, however in reality, the scenario is not the same and the effect as reflected on the growth which has been going down from 40% in September 2019 and now reflecting only a 15% in the year-to-date growth. Interestingly, the business for own -damage or commonly known as OD has shown a great month performance and 11% year-on-year during September 2019. And here, the private companies occupy a large market share of 10% year-on-year growth as compared to the public sector units which have shown more or less the same numbers. Own Damage business growth has been fast-paced and it is 11% year-on-year against a 1% growth in YTD for the financial year 2019-2020.

Recent Data- Health Insurance

Health Insurance is another important aspect of general insurance. And here the overall business growth has shown a decreasing trend of 12% year-on-year as compared to the year-to-date track rate of 17%. This is mainly due to the foreign business and weakness which has been observed in the government. If we further bifurcate health insurance business, retail health showed a good pace at 18% year-on-year growth in December 2020 as compared to a 13% YTD for the financial year 2019-2020. Group Health Business showed a much better growth of 34% year-on-year which was 17% growth YTD for the financial year 2019-2020.

Recent Data- Fire Insurance

Another vital general insurance is the fire insurance and the premium in this business again has shown a weakened 10% year-on-year in December 2019 after strong growth of 25%-60% for the last 10-11 months. Giant private business players also showed a decreasing growth like ICICI Lombard down with 40% year-on-year, Bajaj showed a very steep downfall in its growth rate year-on-year being flat as well as HDFC Ergo down with 50% year-on-year. On the other hand, SBI General shows a major growth of 30% year-on-year.

IRDA or The Insurance Regulatory and Development Authority of India has informed about the revised rate of premium for private for two-wheeler and third-party liability for vehicle insurance coverage for the fiscal year 2019-2020. As per the to the new charges, you need to pay more for your two-wheeler and third-party liability for your car from 16th June 2019. As per the IRDAI announcement issued dated 4rth June 2019, bearing in mind the compulsion of third-party insurance, insurers will have to make sure that the facility of third-party insurance is obtainable at their underwriting workplaces and through all accessible distribution network as well as online. Any complaint of non-availability of third-party insurance or any means to repudiate or delay of the said the insurance cover will be looked upon very seriously.


Motor General insurance in India currently showing a dip in its growth on third-party premium growth, however, we must not forget this is a mandatory requirement also keeping in mind the safety and security of the riders and others on the road.

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