← Policy & Regulation: Pricing and Tariff Control (all topics)
Motor TP administered pricing
What it is
Third-party motor liability cover is compulsory and its premium is fixed by government notification rather than by the insurer. Rates were left unrevised for several consecutive years to FY26 despite claims inflation
Motor third-party loss ratios have run well above 100% across much of the industry, so the segment loses money before investment income
Impact on industries
- The insurer bears open-ended liability at a price it cannot set - TP claims have no monetary cap and are settled by tribunals, so severity inflates independently of premium
- Deferred revisions compound the problem: when rates stay frozen through inflationary years, the loss ratio deteriorates with no remedy available to the underwriter
- Because the cover is compulsory, insurers cannot decline the segment outright, though some scale back exposure deliberately
- A notified rate revision flows almost entirely to the top line with no acquisition cost attached, so it is the single most powerful lever available to the sector