IRDA hikes insurance provisioning to 210%

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Irda has asked companies to charge themselves a 210 per cent provisioning for a high risk category of third party motor insurance risks. Irda has asked companies to charge themselves a 210 per cent provisioning for a high risk category of third party motor insurance risks.
SummaryGeneral insurance companies worry as Irda's new norm doesn’t allow raising premium.

scrapped the old third party pool and introduced the Declined and Non-declined segments in 2012.

“Though meant for the Declined Risk Pool, it make us go for a higher provisioning now onwards,’’ said the CEO of private sector general insurance company. This means general insurers will have to take a hit on their profitability after providing higher capital for the third party motor portfolio.

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Irda has asked companies to provision 210% for a high risk category of third party motor insurance risks. It is 110% so far

General insurance companies are now in a fix since they cannot charge a commensurately higher premium to make up for the cost special committee formed by the regulator has recommended the higher ratio for what is known as the Declined Risk Pool.

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