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Motor TP insurance: Administered price, long term cover vs deregulated price, one year cover

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 The Indian general insurance industry is divided on the aspect of long term versus one year motor third party risk cover and its pricing mode.

However, they are unanimous in their view that the third party insurance should be under them and not with the central government or administered as a pool.

Vehicle insurance policies are two parts — own damage (insurance for the vehicle against damage, theft) and third party liability (liability for third parties).

The third party insurance cover is mandatory whereas the insurance cover for vehicle damage is not mandatory. The premium is fixed by Insurance Regulatory and Development Authority of India (IRDAI).

The general insurer’s role in designing the risk cover, promoting it, and fixing the premium is almost zero.

“I am for the deregulation of the third party premium rates. The premium rate is not administered one in major countries,” Varun Dua, Managing Director and CEO, Acko General Insurance Limited, told IANS.

Like him, many CEO when asked by IANS agree for deregulation of premium rates but strangely that is not happening.

Even after two decades after liberalisation of the sector citing various reasons including reduction in premium, insurers seem to want the price to be administered with yearly upward revision and not as per their claims experience.

Nearly 40 per cent of the general insurance business is from the motor insurance vertical and a major portion of that from third party risk cover, insurers are not enthusiastic about any changes resulting in lower premium and investment income.

Contrary to the claims made by the general insurers that they are incurring huge losses under the motor portfolio, the numbers as per the Insurance Information Bureau of India (IIB) study shows the contrary.

In its annual report on motor insurance for the fiscal 2018-19, the IIB said a sum of Rs.35,519 crore of motor claims – towards vehicle damage (Rs.18,262 crore) and third party liability (Rs.14,257 crore) were settled during 2018-19- while the gross underwritten premium was Rs.64,522.35 crore.

According to the report, the average settlement amount for death claims during fiscal 2018-19 was Rs. 901,207 and for injury claims it was Rs. 251,094.

The industry players also claim that a large number of vehicles run on the roads without third party insurance.

However, they do not have any answer when asked how that impacts them as they pay claims only on those policies issued by them and it is for the police to penalise the violators.

Industry players say they bring in efficiency in third party loss management when queried about insurers being freed of third party insurance in favour of the central government or administered as a pool.

“The insurer is bringing in expertise and efficiency in loss administration and fraud control. At the same time, claims administration requires a lot of manpower and infrastructure which has already been set up and improved by various insurers,” Adarsh Agarwal, Appointed Actuary, Go Digit General Insurance told.

According to him, a policyholder decides on the mode of claim for vehicle damage – whether under own damage part or getting into an arbitration for a third party claim under a third party property damage clause- separating the two may put him into difficulty.

Unless there is a process advantage that speeds up the third party claims with the judiciary involved, Agarwal added.

“One cannot wish away the role of insurers. They ensure easy access, availability of such insurance products which cannot be replicated by an already overburdened government,” R. Raghavan, former General Manager of General Insurance Corporation of India (GIC Re) and founder CEO of Insurance Information Bureau of India (IIB) told IANS.

Insurers are well equipped to handle the stretched claims process in Motor Accident Claims Tribunals and subsequent litigation, he added.

Raghavan said, though IRDAI still keeps finalising the premium rates, the insurers supply necessary data for the actuarial pricing process.

On the point of long term motor third party policy Raghavan said: “It is in the interest of the society at large, for insurance terms to be longer in duration. It also helps insurers to balance their books towards making adequate provision for such long tail liabilities. Portability may effectively undo this equity and also lead to wild goose chase in pinning the right insurer for payment. An insurer with a multi year commitment will work on price efficiency too,” Raghavan said.

Differing on that Agarwal said: “Long term policies have a twofold problem. A customer is encouraged to stick to one company despite the service quality they get from the current insurer as changing the insurer has an inherent inertia mid-way. Secondly, accounting the spare portion and labour cost for a longer term, given the inflation, is tricky and not ideal for the general insurance industry.”

“If one makes non-life insurance a long-term contract, the capital needs, provisioning norms and others would kick in. How it would impact an insurer in the future as motor third party claims are long-tailed ones is not known now,” and industry official told preferring anonymity.

Locking in a policyholder for five long years with one insurer also makes the playing field anti-competitive and anti-policyholder.

“The vehicle dealers will have an upper hand. They will demand higher compensation from the insurers. Already dealers are selling only policies of those insurers from whom they get higher commissions and other perks,” an industry official told

Business

Foreign investors make notable return to Indian equity markets in April

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New Delhi, April 26: Foreign investors have made a notable return to Indian equity markets this month, emerging as net buyers over the past two weeks, analysts said on Saturday.

In just the last seven trading sessions, foreign portfolio investors (FPIs) have turned decisively positive on Indian equities. This shift is largely attributed to a weakening US dollar, revisit of tariff agreements and a renewed sense of optimism surrounding India’s economic trajectory.

“Amid a challenging global backdrop, marked by sluggish growth in major economies like the United States and China, India continues to stand out higher for its economic resilience,” said Manoj Purohit, Partner and Leader, FS Tax, Tax and Regulatory Services, BDO India.

India is forecast to grow at a robust rate of over 6 per cent in FY26 and remains the only fastest-growing economy, making it a compelling destination for global investors.

“FPI inflows are expected to remain strong in the near term, providing additional support to the ongoing market rally. As global investors reassess their strategies, India’s economic fundamentals and earnings potential position it as a beacon of stability and growth in a turbulent events happening globally,” Purohit explained.

This month (till April 24), FPIs purchased equities worth Rs 22,716.43 crore while they sold equities worth Rs 17,196.33 crore, with net investment of Rs 5,520.1 crore.

Last month, FPIs ramped up buying in the second half of March 2025, driving a recovery in select sectors. BFSI led the inflows with a turnaround from $380 million selling to $2,055 million buying, netting $1,675 million for the month.

Telecommunications and metals and Mining also saw net inflows of $360 million and $219 million, respectively, according to a recent note by Bajaj Broking. Overall, FPI interest remained focused on BFSI, with most other sectors facing continued selling pressure.

With a strong economic outlook, policy reforms and a resilient market, India remains an attractive destination for global capital. The government’s continued focus on infrastructure, digital growth, and ease of doing business further boosts investor confidence.

The recent move by RBI to keep the existing corporate bond and G-sec limits unchanged for foreign portfolio investors (FPIs) is a testimony of the government’s intent to keep gateway open for offshore participants to continue infusing funds in India market.

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National

Big relief for Kunal Kamra as Bombay HC grants protection from arrest

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Mumbai, April 25: In a major relief for stand-up comedian Kunal Kamra, the Bombay High Court on Friday granted him protection from arrest in connection with an FIR lodged over his satirical video and his controversial “gaddar” (traitor) remark aimed at Maharashtra Deputy Chief Minister Eknath Shinde.

The court directed the Mumbai Police not to take any coercive action against Kamra, who is currently residing in Chennai.

The FIR had been filed following the circulation of a video in which Kamra allegedly mocked Shinde and referred to him as a “gaddar,” sparking outrage among the Shiv Sena (Shinde faction) supporters.

While restraining the police from arresting the comedian, the court, however, allowed investigators to proceed with their inquiry.

It permitted the Mumbai Police to travel to Chennai to question Kamra, with the assistance of the local police.

The court said if the police file a charge sheet, the trial court should not proceed till the High Court decides the quashing petition filed by Kamra.

Kamra had filed a plea before the High Court seeking to quash the FIR filed against him.

Earlier on April 16, the High Court had granted him interim bail, which has now been made regular.

The FIR was filed at Khar police station following a complaint by Shiv Sena legislator Muraji Patel after Kamra, during a performance of his stand-up show Naya Bharat, allegedly referred to Shinde as a ‘gaddar’.

Kamra was initially granted interim anticipatory bail by the Madras High Court before he moved the Bombay High Court to seek quashing of the FIR and grant of regular bail.

The remark was purported as a reference to Shinde’s political defection from the Uddhav Thackeray-led Shiv Sena to join hands with the BJP, which led to a dramatic split in the party and the rise of a new ruling coalition MahaYuti.

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Business

Demand for homes priced Rs 1 crore and above boosts market in India: Report

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Mumbai, April 24: The demand for homes prices Rs 1 crore and above bolstered the Indian property market in the first quarter this year, preventing overall sales of 65,250 units from hard landing, a report said on Thursday.

Residential sales in Q1 2025 (January-March) experienced only a modest decline and added up to 65,246 units. This limited drop was primarily due to robust demand in the Rs 3-5 crore and Rs 1.5-3.0 crore segments, which helped counterbalance the slowdown in relatively affordable housing, according to a JLL report.

The steady growth in higher ticket size homes indicates increasing affluence among homebuyers, changing lifestyle preferences and buyers prioritising larger and premium properties.

According to the report, housing sales in India’s top seven cities continued to be dominated by Bengaluru, Mumbai, and Pune, which collectively accounted for 66 per cent of Q1 sales.

High concentration of MNCs and startups creating significant employment opportunities and ongoing infrastructure improvements make these cities increasingly attractive places to live and work.

It is interesting to note that over the last few quarters a significant share of quarterly sales volume has been contributed by projects launched during the same quarter.

Q1 2025 was no exception, with around one-fourth of its sales being contributed by quarterly new launches. Launches by reputed developers with assurance of timely delivery and steady price appreciation, are driving the trend, the report informed.

“The residential real estate market is showing signs of a shift in buyer preferences with lowering of demand for less than Rs 1 crore housing and a growing affinity for mid to high-end properties. This as well suggests a potential upward movement in the overall market dynamics,” said Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

“This upswing in the higher-priced segment demand has shielded the overall housing sales from a sharper decline,” Das added.

Developers are focusing more on mid to high-end projects to align with current demand patterns. High-end housing sector experienced a steady upswing with 107 per cent year-on-year growth in launches of properties priced at Rs 1 crore and above, driven by strong sales in this segment.

Growth in launches despite economic uncertainties signals robust developer confidence in high-end housing demand, said the report, adding that 2025 is poised for robust growth in the residential sector demand.

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