Insurers Push for Motor Third-Party Premium Hike After Four Years as Losses Widen
Non-life insurance companies in India are seeking a revision in motor third-party (TP) premiums for the first time in four years, citing mounting underwriting losses and the impact of a recent Supreme Court judgment on compensation calculations.
The last hike in motor TP premiums was implemented on June 1, 2022, based on recommendations from the Insurance Regulatory and Development Authority of India (IRDAI) and notification by the Ministry of Road Transport & Highways. Premiums had remained frozen during the COVID-19 period of FY21 and FY22 to ease the burden on vehicle owners.
According to Girija Subramanian, Chairman-cum-Managing Director of New India Assurance, the motor TP line of business has been under pressure due to a lack of premium increase and persistent claims inflation. The company reported an underwriting loss of Rs 1,297.17 crore in the motor segment for the first quarter of FY27, up from Rs 824.58 crore in the same period last year. Its overall consolidated net loss stood at Rs 243.94 crore, compared with a profit of Rs 392.40 crore a year ago.
The Supreme Court's judgment on June 11, 2026, recognising the economic value of unpaid domestic work by homemakers under the Motor Vehicles Act, has further increased insurers' claims burden. The judgment introduces a separate head of 'Loss of Domestic Care' based on a monthly income of Rs 30,000, with periodic inflation adjustments. Sanjeev Mantri, MD and CEO of ICICI Lombard, estimated that this could increase the motor TP loss ratio by 12-15%.
ICICI Lombard reported a 46% decline in net profit for the June quarter and has set aside claim reserves of Rs 165 crore due to the judgment. The company's CFO stated that a revision in motor TP pricing is clearly needed and will be represented through the industry body.
The motor TP segment accounts for approximately 60% of the total motor insurance premium pool, while own damage (OD) comprises 40%. The General Insurance Council has filed a revision petition seeking a review of the Supreme Court order, but insurers maintain that an upward revision of premiums is urgent to restore adequacy.
