“IRDAI, Govt Propose Up to 10% Rise in Third‑Party Motor Insurance Premiums by October 2025”

The Insurance Regulatory and Development Authority of India (IRDAI) and the Ministry of Road Transport & Highways (MoRTH) are considering raising third-party motor insurance premiums by an average of up to 10%, with implementation expected by October 1, 2025, or possibly April 1, 2026.

Insurance companies had proposed increases ranging from 5% to 15%, citing significant losses from pandemic-related claims, accelerated claim payouts, and increasing court awards. Net claims ratios reached 82% in FY 2023–24, with ultimate loss ratios at 88–91%, putting insurers under significant strain.

Segment segregation: Commercial and goods vehicles—hit hardest—may face sharper increases, while school buses and low-risk categories might receive minimal or no hike to minimize social impact.

Current pricing: Third-party cover for small cars (≤1,000 cc) stands at ₹2,100, and for cars between 1,000–1,500 cc at ₹3,400; these rates could both increase by around 10%.

Implementation timeline: The earliest deployment is October 1, 2025, with a fallback to April 1, 2026, if delays occur.

New India Assurance’s CMD highlighted that motor TP business is mandated and is a loss maker—claim ratios hit 108% in FY 2024–25—making rate revision essential for industry survival.

What It Means for Vehicle Owners

• Expect a ~10% increase in third-party premiums beginning October 2025.
• Commercial vehicles could see larger hikes.
• School buses and low-risk segments may see no or minimal increases.
• The raise aims to rebalance rising claim costs and ensure insurer viability.

The proposed premium revision is a regulatory response to escalating claims and stretched loss ratios. The differentiated hike—higher for commercial vehicles, lower or nil for school buses—reflects a sensitivity to both industry sustainability and public interest.