- Industry Focus
- Insurance Policies
- Our Services
November 12, 2014
Long-term motor insurance for commercial vehicles is still some time away because non-life insurers are unprepared to bear the same premium costs for a duration longer than a year.
While long-term motor policies are being envisaged for the segment, general insurers are wary of these products especially in the commercial vehicle category because pricing cannot be revised while a policy is still in force, reported the Business Standard.
In addition, this category of business is a loss-making one. It is estimated that the combined ratio for motor insurance might hit 200% by 31 March 2015 on the back of higher claims especially from commercial vehicles.
“It is not viable to launch three-year policies for commercial vehicles because of the claims experience that the industry has had in this segment. Our motor book will suffer if we do so,” said the head of underwriting at a mid-size general insurer.
According to general insurance company executives, even though overall motor cover prices have risen this year, the increase is insufficient to compensate for underwriting losses and the higher combined ratio.
The Insurance Regulatory and Development Authority recently decided to limit the third-party premium hikes in motor insurance to 9-20%, compared to a proposal from the industry for hikes in the range of 20-137%.
IRDA has also introduced long-term motor third party insurance policy for two wheelers with a three-year term.