Pvt, Public Insurers Spar Over Motor Insurance De-tariffing

New Delhi, January 21: | Updated: Jan 22 2003, 05:30am hrs
Private and public sector general insurers seem to be vertically split over the issue of de-tariffing motor insurance in the own damage (OD) segment.

Floor premium rates for certain segments, including motor, have till now been set by the tariff advisory committee, a statutory body now under the Insurance Regulatory and Development Authority (Irda). It is proposed that companies be allowed to fix tariffs on their own, starting with OD in motor.

While public sector undertakings (PSUs) view the present liberalised milieu as "the best time to begin de-tariffing", private insurers have begun lobbying against it on the plea that it was too early for them at this stage to operate in a tariff-free market.

The matter of de-tariffing is being examined by a committee under the chairmanship of Justice (retd) TNC Rangarajan. It has been asked to go into the various aspects of motor underwriting, including de-tariffing and pooling arrangements. It has representatives from the Tariff Advisory Committee, Royal Sundaram General Insurance Corporation, National Insurance Corporation, New India Assurance, Iffco-Tokio Marine Insurance, the ministry of surface transport, and a number of transport associations.

Asked for his views on the demand for withdrawing de-tariffing by a section of insurers, Irda chairman N Rangachary said there was ample time, since the panel has to submit its report by March 31.

According to PSU officials, before opening up of the sector, foreign insurers had voiced doubts on the feasibility of doing motor business in the country, given the unsustainably low levels of premia.

They contended that Indian industry charged just 2-3 per cent of insured value, whereas the global practice was 5 per cent or more. Even till the Rangarajan committee was actually set up, the private insurers had been in favour of freeing motor premia.