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Exposure Draft
Ref. No: IRDA/NL/MTP/2020-21/EXDRF Date: 05-03-2020
Exposure Draft on Revision in Premium Rates for Motor Third Party Insurance Cover for the Financial Year 2020-21

 

1.   By virtue of powers vested in the Authority under Section 14 (2) (i) of the IRDA Act, 1999, the Authority has been notifying the premium rates applicable to Motor Third Party (TP) Liability Insurance, every year, starting from 2011.

 

2.   The Motor Third Party rates proposed by IRDAI for the year 2020-21 (ending 31st March, 2021) for various categories of vehicles, which shall come into force from the date to be notified, have been arrived at as follows:

I.            Data source and Data used:

 

1.     The data provided by the Insurance Information Bureau of India (IIBI) has been used for arriving at the Motor TP premium rates.

2.     The claims paid data in respect of each of the accident years starting from the year 2011-12 up to 2018-19 has been considered, taking into account the combination of 'Class Code' and 'Vehicle CC/PCC/GVW' Code.

3.     Gross Written Premiums for the FYs 2011-12 to 2018-19 have been considered.

 

II.          Basic Methodology

1.     Paid claims data has been considered for construction of cumulative paid claims triangle for each homogenous subclass with Accident Year (AY) as origin year and Financial Year (FY) as development year.

2.     The ultimate claims cost for each accident year has been estimated using the actuarial technique of Basic Chain Ladder Method applied to cumulative paid claims data.

3.     Age-to-Age-factors (ATAFs) for each Accident Year (AY) and Development Year (DY) have been calculated. Development factors were selected after considering various averages of ATAFs: simple average of all years, volume weighted average, average of last 3 years, average of last 5 years and highest of all the averages.

4.     The oldest Accident year has eight years of development which is insufficient for complete settlement of claims as Motor Third Party is long tailed liability business. A tail factor has been assumed for all the categories of vehicles for the complete run off of the claims paid. Losses for each AY are projected using BCL and an assumed tail factor was applied to arrive at the Ultimate Claim amounts.

5.     The financial year-wise Gross Written Premium has been converted to financial year wise Gross Earned Premium (GEP) by applying the formula:


 

6.     Ultimate Loss Ratio (ULR) for each Accident year is calculated as Ultimate Claims/Gross Earned Premium

 

 

7.     Average Premium from Data for each financial year was calculated as Gross Earned Premium / Exposed Policies where, exposed policies are derived from number of policies using a similar approach as under the above para 5.

8.     Burning Cost (BC) per policy for each Accident year was computed by multiplying Ultimate Loss Ratio and Average Premium as calculated under the above paras 6 and 7 respectively.

9.     By considering the projected Burning Cost and loading it with appropriate expenses, Premium rates for the FY 2020-21 have been derived.

10.  The actuarial rates have been arrived at after factoring in the necessary assumptions and after smoothening, wherever necessary.

 

III.        As for the Vintage Cars segment, there is no substantial data relating to the past experience. A discounted price of 50% of the proposed rate based on the erstwhile Indian Motor Tariff (IMT) has been proposed for those private cars identified as Vintage Cars by the Vintage and Classic Car Club of India.

 

IV.         A discount of 15% is proposed for Electric Private Cars, Electric Two Wheelers, Electric Goods carrying Commercial Vehicles and Electric Passenger carrying Vehicles. The proposed discount will incentivize usage of environmental friendly Vehicles. The rates for the Electric Vehicles are given in Tables V, VI, VII & VIII.

 

V.           A discount of 7.5% on Motor TP premium rates for Hybrid Electric Vehicles is proposed. This will be an incentive to use environment friendly vehicles.

 

 

3.   The details of proposed Motor TP premium rates for the various classes of vehicles are tabulated below:

Table I

Category

Vehicle Type

Existing Rates

Proposed Rates

(Rs)

(Rs)

FY 2019-20

FY 2020-21

 

Private Cars

 

Not exceeding 1000 cc

2,072

2,182

Exceeding 1000 cc but not exceeding 1500 cc

3,221

3,383

Exceeding 1500 cc

7,890

7,890

 

Two Wheelers

 

Not exceeding 75 cc

482

506

Exceeding 75 cc but not exceeding 150 cc

752

769

Exceeding 150 cc but not exceeding 350 cc

1,193

1,301

Exceeding 350 cc

2,323

2,571

A1

Goods Carrying Commercial Vehicles (other than 3 wheelers) - Public

 

GVW not exceeding 7500 kgs

15,746

16,092

Exceeding 7500 kgs but not exceeding 12000 kgs

26,935

28,288

Exceeding 12000 kgs but not exceeding 20000 kgs

33,418

35,139

Exceeding 20000 kgs but not exceeding 40000 kgs

43,037

44,342

Exceeding 40000 kgs

41,561

44,457

A2

Goods Carrying Commercial Vehicles (other than 3 wheelers) - Private

 

GVW not exceeding 7500 kgs

8,438

8,607

Exceeding 7500 kgs but not exceeding 12000 kgs

17,204

17,549

Exceeding 12000 kgs but not exceeding 20000 kgs

10,876

11,094

Exceeding 20000 kgs but not exceeding 40000 kgs

17,476

17,827

Exceeding 40000 kgs

24,825

25,323

A3

Goods Carrying Motorized Three Wheelers and Motorized Pedal Cycles – Public Carriers

 

except e-carts

4,092

4,489

A4

Goods Carrying Motorized Three Wheelers and Motorized Pedal Cycles – Private Carriers

 

except e-carts

3,914

3,922

B

Trailers

 

Agricultural Tractors upto 6 HP

857

918

Other vehicles including Miscellaneous & Special Type of Vehicles (Class-C),(For each trailer, for more please multiply by no. of trailers)

2,341

2,507

 

Table II

Category

Vehicle Type

Existing Rates (Rs.)

Proposed Rates (Rs.)

FY 2019-20

FY 2020-21

Basic Rate

Per Licensed Passenger

Basic Rate

Per Licensed Passenger

C1a

Four wheeled vehicles used for carrying passengers for hire or reward with carrying capacity not exceeding 6 passengers

 

Not exceeding 1000 cc

5,769

1,110

6,370

1,226

Exceeding 1000 cc but not exceeding 1500 cc

7,584

934

8,375

1,031

Exceeding 1500 cc

10,051

1,067

11,099

1,178

C1b

Three wheeled vehicles used for carrying passengers for hire or reward with carrying capacity not exceeding 6 passengers

 

except e-rickshaw

2,595

1,241

2,595

1,241

C2

Four or more wheeled vehicles used for carrying passengers with carrying capacity exceeding 6 passengers for hire or reward

 

School Bus*

13,874

848

14,338

876

Other Bus

14,494

886

14,978

916

C3

Motorized three wheeled passenger vehicles used for carrying passengers for hire or reward with carrying capacity exceeding 6 passengers but not exceeding 17 passengers

6,913

1,379

6,913

1,379

C2

Three wheeled passenger vehicles used for carrying passengers for hire or reward with carrying capacity exceeding 17 passengers

15,845

969

15,845

969

C4

Motorized Two wheelers used for carrying passengers for hire or reward

 

Not exceeding 75 cc

861

580

861

580

Exceeding 75 cc but not exceeding 150 cc

861

580

861

580

Exceeding 150 cc but not exceeding 350 cc

861

580

861

580

Exceeding 350 cc

2,254

580

2,254

580

*School Buses are those buses which are registered in the name of the School and are used only for transporting students to or from a school or on school related trips.

 

Table III

Category

Vehicle Type

Existing Rates
(Rs.)
FY 2019-20

Proposed Rates
(Rs.)
FY 2020-21

D

Special Types of Vehicles

 

i)   Pedestrian controlled Agricultural Tractors with Horse Power rating not exceeding 6HP, Hearses and Plane Loaders

1,550

1,660

ii) Other Misc & Spl types of vehicles

6,847

7,332

E

Motor Trade (Road Transit Risks)

 

i) Distance not exceeding 2400 kms

1,055

1,141

ii) Distance exceeding 2400 kms

1,268

1,371

F

Motor Trade (Road Risks) (Excluding Motorized Two Wheelers) – (Named Driver or Trade Certificate)

 

1st named driver or certificate

1,345

1,455

For additional drivers/ certificates up to 5 (per driver/certificate)

651

704

For additional Drivers/ Certificates exceeding 5 but not exceeding 10 (per driver/ certificate)

419

453

For additional Drivers/ Certificates exceeding 10 but not exceeding 15 (per driver/ certificate)

363

393

F

Motor Trade (Road Risks) (Motorized Two Wheelers) – (Named Driver or Trade Certificate)

 

1st named driver or certificate

515

515

For each additional Driver/ Certificate

257

257

 

 

 

Table IV

Category of Vehicle

Existing Rates (Rs.)

Proposed Rates (Rs.)

FY 2019-20

FY 2020-21

New Private Car – Three year single premium

Not exceeding 1000 cc

5,286

6,079

Exceeding 1000 cc but not exceeding 1500 cc

9,534

10,149

Exceeding 1500 cc

24,305

24,305

New Two Wheeler – Five year single premium

Not exceeding 75 cc

1,045

1,223

Exceeding 75 cc but not exceeding 150 cc

3,285

3,845

Exceeding 150 cc but not exceeding 350 cc

5,453

6,505

Exceeding 350 cc

13,034

13,034

 

 

Table V

Rates for Electric vehicles – Non passenger carrying

Category

Vehicle Type

Existing Rates

Proposed Rates

(Rs)

(Rs)

FY 2019-20

FY 2020-21

 

Private Cars

 

Not exceeding 30 KW

1,761

1,855

Exceeding 30 KW but not exceeding 65 KW

2,738

2,876

Exceeding 65 KW

6,707

6,707

 

Two Wheelers

 

Not exceeding 3 KW

410

430

Exceeding 3 KW but not exceeding 7 KW

639

654

Exceeding 7 KW but not exceeding 16 KW

1,014

1,106

Exceeding 16 KW

1,975

2,185

A1

Goods Carrying Commercial Vehicles (other than 3 wheelers) - Public

 

GVW not exceeding 7500 kgs

-

13,678

Exceeding 7500 kgs but not exceeding 12000 kgs

-

24,045

Exceeding 12000 kgs but not exceeding 20000 kgs

-

29,868

Exceeding 20000 kgs but not exceeding 40000 kgs

-

37,691

Exceeding 40000 kgs

-

37,788

A2

Goods Carrying Commercial Vehicles (other than 3 wheelers) - Private

 

GVW not exceeding 7500 kgs

-

7,316

Exceeding 7500 kgs but not exceeding 12000 kgs

-

14,917

Exceeding 12000 kgs but not exceeding 20000 kgs

-

9,430

Exceeding 20000 kgs but not exceeding 40000 kgs

-

15,153

Exceeding 40000 kgs

-

21,525

A2

Goods Carrying Motorized Three Wheelers and Motorized Pedal Cycles – Public Carriers

 

e-carts

2,859

3,136

A3

Goods Carrying Motorized Three Wheelers and Motorized Pedal Cycles – Private Carriers

 

e-carts

3,204

3,211

 

Table VI

Long term rates for electric vehicles – Private Cars and Two wheelers:

Category of Vehicle

Existing Rates (Rs.)

Proposed Rates (Rs.)

FY 2019-20

FY 2020-21

New Private Car – Three year single premium

Not exceeding 30 KW

4,493

5,167

Exceeding 30 KW but not exceeding 65 KW

8,104

8,627

Exceeding 65 KW

20,659

20,659

New Two Wheeler – Five year single premium

Not exceeding 3 KW

888

1,040

Exceeding 3 KW but not exceeding 7 KW

2,792

3,268

Exceeding 7 KW but not exceeding 16 KW

4,635

5,529

Exceeding 16 KW

11,079

11,079

 

 

 

 

Table VII

Rates for Electric vehicles – Passenger carrying

Vehicle type

KW Segments

Proposed Basic TP premium (Rs.)

Proposed Premium per licensed passenger (Rs.)

C1a (Four wheeled vehicles used for carrying passengers for hire or reward with carrying capacity not exceeding 6 passengers)

Not exceeding 30 KW

5,414

1,042

Exceeding 30 KW but not exceeding 65 KW

7,119

876

Exceeding 65 KW

9,434

1,001

C1b (Three wheeled vehicles used for carrying passengers with carrying capacity not exceeding 6 passengers)

e-rickshaw

1,685

806

C2 (Four or more wheeled vehicles used for carrying passengers with carrying capacity exceeding 6 passengers for hire and reward)

School Buses

12,187

745

Other than School Buses

12,731

779

C3 (Motorised three wheeled passenger vehicles used for carrying passengers for hire or reward with carrying capacity exceeding 6 passengers but not exceeding 17 passengers)

-

5,841

1,165

C2 (Three wheeled vehicles used for carrying passengers for hire and reward with carrying capacity exceeding 17 passengers)

-

13,388

819

C4 (Motorised Two Wheelers used for carrying passengers for hire or reward)

Not exceeding 3 KW

732

493

Exceeding 3 KW but not exceeding 7 KW

732

493

Exceeding 7 KW but not exceeding 16 KW

732

493

Exceeding 16 KW

1,916

493

 

 

Table VIII - Quadricycle

Category

Vehicle Type

Existing Rates (Rs.)

Proposed Rates (Rs.)

FY 2019-20

FY 2020-21

Basic Rate

Per Licensed Passenger

Basic Rate

Per Licensed Passenger

Quadricycle

Private Car

2,072

N/A

2,182

N/A

Electric private Car(Not exceeding 30 KW)

-

-

1,855

N/A

Commercial Vehicles not exceeding 500 CC

2,595

1,241

2,595

1,241

 

Long term rates – Three years single premium:

Category

Vehicle Type

Existing Rates (Rs.)

Proposed Rates (Rs.)

FY 2019-20

FY 2020-21

Quadricycle

New Private Car

5,286

6,079

New Electric private Car (Not exceeding 30 KW)

4,493

5,167

 

4.   All stakeholders are invited to provide their comments on this exposure draft. The comments should reach the Authority either physically or through e-mail addressed to janita@irdai.gov.in with a copy to sagar.bangal@irdai.gov.in, on or before 20th March 2020.

 

(Yegnapriya Bharath)

Chief General Manager (Non-Life)

 

 

 

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