DW Simpson
08-26-2005, 12:21 PM
http://www.financialexpress.com/fe_full_story.php?content_id=100500
Irda giving final touches to detariffing motor insurance
R Ravichandran
Chennai, Aug 25 The general insurance companies’ long pending demand for detariffing motor, fire and engineering insurance businesses may soon become a reality. The Insurance Regulatory and Development Authority (Irda) is giving final touches to a draft proposal that allows insurers to fix their own premium for these products subject to necessary regulatory approvals.
When contacted, Irda Chairman CS Rao confirmed that the regulator is currently working on the draft proposal, incorporating various suggestions received from industry players. The draft would be submitted to the finance ministry for its approval after getting the feedback from the industry, he added.
“It cannot be done overnight as the draft proposal has to be prepared based on various facts and figures. But it will be done soon. Irda would lay down strict norms for fixing the premium for these products and the companies will need our clearance before launching the product”, Mr Rao said.
Together motor, fire and engineering rake in close to 65% of business for general insurers and motor alone accounts for 45% of the overall business. However, motor claims are like an albatross across the neck of insurance companies as the current system of ‘limited premium and unlimited liability’ is cited as a major reason for the huge underwriting losses of general insurers.
The underwriting losses on motor claims ranges between 100% for some companies and 130% for some others. The industry has been clamouring for detariffing the motor insurance for long, but the powerful truck lobby has been blocking the move.
Irda giving final touches to detariffing motor insurance
R Ravichandran
Chennai, Aug 25 The general insurance companies’ long pending demand for detariffing motor, fire and engineering insurance businesses may soon become a reality. The Insurance Regulatory and Development Authority (Irda) is giving final touches to a draft proposal that allows insurers to fix their own premium for these products subject to necessary regulatory approvals.
When contacted, Irda Chairman CS Rao confirmed that the regulator is currently working on the draft proposal, incorporating various suggestions received from industry players. The draft would be submitted to the finance ministry for its approval after getting the feedback from the industry, he added.
“It cannot be done overnight as the draft proposal has to be prepared based on various facts and figures. But it will be done soon. Irda would lay down strict norms for fixing the premium for these products and the companies will need our clearance before launching the product”, Mr Rao said.
Together motor, fire and engineering rake in close to 65% of business for general insurers and motor alone accounts for 45% of the overall business. However, motor claims are like an albatross across the neck of insurance companies as the current system of ‘limited premium and unlimited liability’ is cited as a major reason for the huge underwriting losses of general insurers.
The underwriting losses on motor claims ranges between 100% for some companies and 130% for some others. The industry has been clamouring for detariffing the motor insurance for long, but the powerful truck lobby has been blocking the move.