During the summit, Irdai also emphasised the need to have innovative products in the insurance industry that will help investors with lower premiums.
Amid concerns over the current draft norms on premium rates for third-party motor insurance, which will have a sharp increase in premiums, insurance regulator Irdai on Thursday said a rise in premiums is inevitable.
Last week, Irdai released the exposure draft in which premiums are set to rise in the range of 16% and 50% on various motor segments like two-wheelers and private cars. “We have started receiving comments from various people, but there are some customers who are not happy with hike in premiums. However, looking at the reality of the business, a hike in the premiums is inevitable. Insurance is all about pooling and settlement of risks, the problem with motor third part is that claims amounts keep on vary its not fixed, so claims amount changes even premiums has to undergo change,” Irdai chairman T S Vijayan said here at a conference on insurance organised by industry body Ficci.
During the summit, Irdai also emphasised the need to have innovative products in the insurance industry that will help investors with lower premiums. “Traditionally, insurance is sold by a person and serviced by a person, and for all this an expenses are involved. When the technology happens, cost could done and premium itself would come down as variations would be possible,” Vijayan added.
On the sidelines of the event, Sanath Kumar, chairman and managing director of National Insurance Company said they are looking to hit the market by the end of next financial year. “Actually we have capital adequacy issues and for improving it from current levels, we have given action plan to the regulators and also to the government of India. My solvency margin has improved from 1.26% to 1.31% at the end of third quarter, we would like to see more improvement by the end of current financial year,” he said.
A high solvency margins would translate better valuations for insurance companies. “I think we will reach 1.5% target by second half of next financial year. Simultaneously, we are moving to internal preparation for our initial public offering (IPO), if everything goes well we should be able to come out by end of next financial year. As on today everything seems to be on track. We have told government we need capital and the process of identify the capital we need is on,” concluded Kumar. During the event, LIC also added that, they would launch Varishtha Pension Bima Yojana offering 8% per annum guaranteed rate of return for 10 years in the next few days.