210 per cent on the provisioning for the Declined Risk Pool is a clear cut indication that the regulator wants higher provisioning for the other segments of motor business too,’’ said the chairman and managing director of a public sector general insurance company who didn’t want to be named. Irda 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.
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.