Third-party motor insurance might soon become more expensive. After the Insurance Regulatory and Development Authority of India (IRDAI), now the Finance Ministry has also shown support for increasing the premium.
According to CNBC-TV18’s Yash Jain, both IRDAI and the Road Ministry have recommended an 18% hike in third-party insurance premiums.
In some categories, the hike could go as high as 20–25%. A decision may come within the next 1–2 weeks.
Proposal Likely to Be Sent Soon
The Road Ministry is expected to propose the premium hike. If the proposal is approved, a draft notification will be released, after which there will be a public feedback and review process. Only after this will the new premium rates be officially implemented.
Why the Hike Matters for Insurance Companies
Experts believe this 18% premium increase will benefit insurance companies. It could help improve their combined ratio by 4–5%.
The combined ratio shows how much a company is spending compared to what it earns — a lower ratio is better.
There has been no premium hike in third-party motor insurance for the last 4 years, even though it is a mandatory insurance in India. It also makes up 60% of all motor insurance business.
Motor Third-Party Loss Ratio Data (FY 2025):
ICICI Lombard: 64.2%
Go Digit: 64.2%
New India Assurance: 108%
A loss ratio over 100% means the company is paying out more in claims than it earns from premiums.
What Is Third Party Insurance?
Third-party insurance covers damages or injuries caused by your vehicle to another person, vehicle, or property. It is legally compulsory in India.
For example, if your car hits someone’s bike or damages their shop, this insurance covers those losses.
However, it does not cover any damage to your own vehicle or self. For that, you need comprehensive insurance.
