According to Insurance Regulatory Authority chairman, N Rangachary, the current system of insurance tariff as fixed by the Tariff Advisory Committee (TAC), a constitutional body will continue for some time at least for `five to ten years' till the new insurance companies which will be allowed soon, establish themselves.

Rangachary has informed this to a top delegation of Bombay Chambers of Commerce which met him in Delhi recently to present some of the suggestions about the insurance sector reforms.

Since 1972 when the general insurance industry was nationalised, the TAC fixes the tariff rates for fire, motor, marine hull and hull busines of all the four subsidiaries. However, IRA after it gets its statutory power will be the final authority for approving the pricing of any insurance products and hence the continuance of the present system where TAC has to prepare the price list of certain segements of the general insurance industry was in question.

TAC which was earlier headed by the chairman of General Insurance Corporation is now functions under IRA chairman.

Rangachary had further said that the Indian public participation in the new insurance companies is not possible.

``However, IRA is open for Indian public participation,'' he suggested.

In another important announcement, Rangachary has said that Sec 40 A of the Insurance Act stipulating the expenditure ceiling of the insurance companies needs some correction. Unlike the present practice where the necessary clause has fixed a 19 per cent of each year's premium income as a celing on the existing four subsidiaries' expenditure limit, Rangachary had said that manageent expenses and type of ceiling distribution will be decided by IRA on case to case basis.

BCCI delegation was told by the regulatory body that it will take nine months to scrutinize the application for setting up new companies and it is expected that the first policy will be issued by the new insurance companies within the 15 months to 18 months of time after the sector is denationalised.

Rangachary has further informed that 40 per cent reserve for fire and 100 per cent marine risks would be suggested for the unexpired risks. IRA is of the view that there would be a change in investment pattern for surplus fund and reinsurance placement in foreign markets.

With regard to ceiling on agency commission, Rangachary said that maximum 35 per cent for the life insurance business and 5 to 15 per cent for non-life business will be allowed.