Insurers say third-party cover rate pause causing distress

General insurers issuing third-party vehicle insurance policies are grappling with rising underwriting costs as inflation and a near three-year pause on rate hikes eat into their business.

- Anshika Kayastha

India mandates third-party vehicle insurance, or liability insurance, for all motorists to cover damages or injuries caused by the policyholder to someone else.

The Insurance Regulatory and Development Authority of India, or Irdai, typically revises the premium rates for third-party vehicle insurance policies every 1-2 years under the Motor Vehicle Act. However, its last rate revision was in June 2022.

India saw a temporary surge in the sales of motor insurance policies after the covid years as new vehicle sales increased. However, the pace has since moderated, partly due to the stagnation in the policy rates for third-party cover.