Ansari panel to review vehicle insurance tariffs

Sitanshu Swain

Mumbai, May 22: THE Insurance Regulatory and Development Authority (Irda) has constituted a high-level panel headed by former member (non-life) H Ansari to review the basic structure of domestic motor insurance tariffs.

This is the first time that such a panel is being constituted by Irda to review both the components of motor insurance: the loss-making third party motor insurance segment and its own motor damage scheme.

“We would like to take a fresh look at the entire gamut of the motor insurance portfolio and not just third party motor insurance, which is threatening the basic survival of the existing state-owned non-life companies,” said a top official of the Tariff Advisory Committee (TAC). The Ansari committee has members from all segments including the transport industry, the automobile association and customers to deliberate and suggest changes in various aspects of the insurance. The committee has already had its first round of meeting in Chennai and plans to finalise its report in couple of months.

For the last five years, all the four state-owned companies — New India Assurance, United India Insurance, Oriental Insurance and National Insurance — have been living on their investment income as their premium income and underwriting profits used to get wiped out by the massive third party motor claim losses.

India has the one of the lowest third party premiums and the highest third party claims as it is an unlimited liability for the insurance companies. Any attempt to hike the premium rate of the third party motor insurance has been thwarted by transport lobbies. The TAC has also initiated moves to broadbase the loss of profit policy and all industrial risk policies. The tariff advisory body is taking a fresh look at the terms and conditions and premiums of the policies.

The new all-industrial risk policy which may be cheaper because of the downward revision of fire tariff will be launched soon. However, the premiums for the loss of profit may go up as the ratio consequential claims out of the losses have gone up. According to a TAC official, so far no companies have planned any add-on products to the existing tariff products.

It was expected that with the advent of competition, both new and old companies, with the approval of the TAC, will improvise new features to the existing traiff products to make them more customer friendly.