5 min readMumbaiJul 27, 2026 07:15 AM IST
Non-life insurers are pushing for a revision in motor third-party premiums, the first in four years, as losses mount in the segment.
Apart from underwriting losses in the Rs one lakh crore plus motor segment, the bottom line of insurers was also affected by a recent Supreme Court judgement on the calculation of the economic value of unpaid domestic work done by homemakers, which increased the cost of computing compensation.
The last implemented hike in third-party motor insurance premiums in India was effective from June 1, 2022. The revised base premium rates were notified by the Ministry of Road Transport & Highways (MoRTH), based on recommendations from the Insurance Regulatory and Development Authority of India (IRDAI). Before 2022, third-party premiums had largely remained unchanged during the Covid-19 period (FY21 and FY22), with the government freezing rates to ease the burden on vehicle owners.
“The Motor Third Party line of business continued to be under pressure as there was no premium increase and claims inflation pressure continued. The significant spike in motor TP loss ratio had a severe adverse impact on the results. The industry is looking forward to a hike in Motor Third Party premium,” said New India Assurance Chairman-cum-Managing Director Girija Subramanian.
New India Assurance reported a higher underwriting loss of Rs 1,297.17 crore in the motor segment in the first quarter of FY27, compared with a loss of Rs 824.58 crore in the same period last year. It reported an operating loss of Rs 1,264.99 crore in the motor segment in the June quarter of FY27, compared with a profit of Rs 182.28 crore a year ago. The company reported an overall consolidated net loss of Rs 243.94 crore, compared with a profit of Rs 392.40 crore in the year-ago period.
An underwriting loss in motor insurance happens when an insurer pays out more in claims than it collects in premiums from vehicle owners.
SC ruling adds to insurers’ claims burden
The recent judgement delivered on June 11, 2026 by the Supreme Court of India has recognised the economic value of unpaid domestic work performed by homemakers while determining compensation under the Motor Vehicles Act. “This judgement provides for compensation under a distinct head, ‘Loss of Domestic Care’ based on a monthly income of Rs 30,000, with periodic increases to reflect inflation and socio-economic changes. Based on a preliminary assessment of the impact of this judgement, the Motor TP loss ratio of the industry is expected to increase in the range of 12% to 15%,” said Sanjeev Mantri, MD and CEO, ICICI Lombard.
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“Given the significance of the judgement impacting motor TP portfolio of the industry, an upward revision of motor TP premium rates becomes both necessary and urgent in order to restore premium adequacy. That being said, the General Insurance Council has also filed a revision petition seeking review of the order,” Mantri said last week while announcing the quarterly results.
ICICI Lombard, which reported a 46% decline in net profit for the June quarter, has, on a prudent and conservative basis, recognised claim reserves amounting to Rs 165 crore in the current quarter on the premium earned during the quarter following the Supreme Court judgment.
Third-party segment accounts for 60% of motor premium pool
“I think we have also been kind of talking about a clear need for a revision in the motor third-party pricing. So, to that extent, I think obviously, this will suitably get represented through the industry body and hence, there is clearly a need for a revision in third-party price change,” said the CFO of an insurance company.
“Motor book typically, you know, comprises OD (own damage) and TP. OD is at an industry level 40% and TP 60%. If you see most players, which are there, would have a book which is heavily skewed towards third-party, and the logic is very simple. OD is driven by high service requirements, and it really tests you because frequency in private cars, and all can go up to 25%,” said an insurance official.
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Out of Rs 1.08 lakh premium collected by insurers in the motor segment, third party premium accounted for Rs 64,227 crore for the year ended March 2026.
In motor insurance, OD also covers damage to the vehicle, unlike third-party insurance, which covers damage or injury caused to others or a third party. Third Party motor insurance is compulsory in India.
The first quarter of FY27 was a challenging quarter for the general insurance industry. The insurance industry property premium crashed by 27.8% during the quarter and QIFY27 being a property heavy quarter for New India Assurance, the overall GWP growth was muted at 2.9%, Subramanian said.
