The General Insurance Council has said that the recent increase in insurance premium announced by the regulator in India is too low to be able to cover losses for the companies in the industry.

The Insurance Regulatory and Development Authority (Irda) has released third-party insurance premium rates for the motor vehicles in the country. IRDA pointed out that the increase in some vehicle categories was higher than earlier estimated. Industry players believe that the increase will not have much impact on the losses in the coming financial year.

"If you see the exposure draft, there was a proposal to increase premium at a higher rate. Even if done at the proposed level, it was inadequate. So, the current rise is too inadequate to cover the losses in this space on the back of rising accidents and claims," General Insurance Council Secretary General R Chandrasekaran said.

The third-party premium rates are set to increase by 20 per cent on average from 1 April, 2013. The regulator released third-party insurance premium rates in an order on Tuesday for all classes and sub-classes of vehicles in the country. Vehicle owners in the country will now have to pay a higher premium on their insurance policies for their vehicles from next month.

The regulator said in its order that for private cars, the third-party premium rate will increase to Rs 941 for cars not exceeding 1,000 cc, Rs 1,110 for cars exceeding 1,000 cc-1,500 cc and Rs 3,424 for cars exceeding 1,500 cc. AS for two- wheelers, the premium rates will now be Rs 414 for vehicles not exceeding 75 cc, Rs 422 for 75 cc-150 cc, Rs 420 for 150 cc-350 cc and Rs 804 for those exceeding 350 cc.