Own damage insurance detariffing plan postponed

KOLKATA: The plan to de-tariff the ''motor - own damage'' insurance segment from April 1 this year has been postponed.
The Insurance Regulatory and Development Authority (IRDA) would, however, examine whether de-tariffing norms could be extended to certain products pertaining to commercial establishments, restaurants and households.
IRDA chairman C.S.Rao said on Friday that the regulator would hold a meeting with general insurers later this month to arrive at a fresh time-frame for the ''motor -own damage'' de-tariffing scheme.
No deadline had been fixed for de-tariffing marine hull, and some products intended for households and commercial establishments, he added.
"They (general insurance companies) want the entire motor insurance segment to be de-tariffed. But we have our concerns on that score and want to go about it in a phased manner," Rao said on the sidelines of an insurance summit organised by the Indian Chamber of Commerce (ICC).
A working group, constituted by the IRDA on own damage insurance, had recommended that the regulator should take steps to move toward a free market regime for the whole motor insurance portfolio in the long run.
Motor insurance accounts for 40% of the general insurance segment. Experts believe de-tariffing the motor market would not only raise premium volumes in motor insurance but also substantially reduce rates in the fire and engineering segments.
However, Rao said general insurance companies were still reluctant about the creation of an "insurance pool" mechanism whereby all insurers share the premium and claims and the net outcome is distributed annually among pool members.
Rao said a working group would submit a report to the IRDA by the end of this month on the steps that should be put in place for establishing stand-alone health insurance companies.Another group was in touch with TPAs to obtain more data on health insurance, he added.
Rao said the government should take a view shortly on whether it would permit a hike in the FDI limit in the insurance sector. "The foreign partner in an insurance joint venture, however, should display his commitment to the Indian market," he added.
Rao said insurance sector liberalisation had benefited the country. "The total premium collected by insurers (both life and non-life) in 2003-04 was Rs 82,415 crore compared to Rs 44,985 crore in 2000-01 representing an 83% increase in the last three years over the base year 2000-01," he said.
Life Insurance Corporation (LIC) chairman R.N. Bharadwaj said LIC would launch new pension and group insurance products by March, some of which would be unit-linked. There were no plans for introducing VRS now, he added.