General insurers have written to the segment regulator, Irda saying that the revision in rates for the forthcoming financial year should be based on the impact of 2011-12 loss ratios in the third-party motor portfolio.
In fact, Irda (Insurance Regulatory and Development Agency) which has announced the hike in provisioning for general insurers third-party portfolio for the years between 2007 to 2010 is yet to specify the provisioning norms for 2011-12 as the losses for the current year portfolio are not yet known.
Also, general insurers have resisted the Irda move to ban any bonus and dividend for their employees without the regulators permission as it would discourage existing as well as fresh promoters.
Any restrictions on bonus and performance incentives on an lndustry issue like Motor TP loss ratios would drastically bring down the talent attraction to the lndustry.
Irdas leniency on these conditions would help boost the current low morale in the industry, added the industry sources. The CEOs of the general insurance industry have said the industry will suffer a huge impact from the additional reserve requirement that has been decided by Irda for the third-party motor portfolio.
However, Irda has kept the general insurers in the dark about the details of the report prepared by the government actuary of UK estimating the accurate losses in the third-party motor portfolio on the basis of which the insurance agency has prescribed the new provisioning norms.
Irda, in a notification on Tuesday evening, has asked the general insurers to hike the third-party motor provisioning from 153% to 159% for 2007 which has to be complied by 2012, to 188% for 2008 (by 2013) , to 200% for 2009 (by 2014) and to 213% for 2010 (by 2015).
However, the insurance regulator is yet to prescribe any figure for 2011-12 which it may announce by March 2012 .
Also, in a bid to ensure a smooth transition for the general insurers in their move to comply with the new provision norms, Irda has also announced some relief on the solvency ratio front.
Accordingly, the general insurers can maintain a solvency ratio of 1.10 in 2012, 1.20 by 2013 1.3% by 2014 and 1.4% in 2015.