Car and bike drivers are in for an unwelcome surprise as the cost of a vital necessity is set to surge by 10%.
The burden of insurance premiums is expected to weigh heavily on the common man,
with companies contemplating an increase in rates to cope with rising costs.
Experts predict that premiums may rise by up to 10% in the current financial year, affecting vehicle owners across the board.
Reasons Behind the Insurance Rate Hike
The surge in insurance rates can be attributed to the escalating costs of reinsurers, the companies that provide insurance to insurance companies.
The ongoing Russia-Ukraine war has significantly impacted these reinsurers, resulting in cost increases of 30 to 40%.
Compounded by rising interest rates set by central banks worldwide, insurance companies face mounting financial strain, directly affecting their services in India.
Understanding the Insurance Landscape in India
India’s general insurance industry comprises 24 companies, collectively holding an impressive 84% market share.
To mitigate unforeseen liabilities and substantial losses, Indian companies opt for extensive insurance coverage,
safeguarding against risks related to fire, marine incidents, engineering, and business interruptions.
Motor Insurance’s Significant Contribution
Under the Indian Motor Vehicle Act, third-party insurance is mandatory for driving in the country.
Motor insurance alone has made a substantial contribution, amounting to approximately Rs 81,292 crore in premiums during the fiscal year 2023.
This segment holds considerable weight within the general insurance industry’s overall business.
