Financial Daily from THE HINDU group of publications
Friday, Oct 25, 2002
Money & Banking
Logistics - General Insurance
IRDA strong-arm tactics pay off Insurers accepting third-party liability cover
Sarbajeet K. Sen
NEW DELHI, Oct. 24
THE flexing of muscles by the Insurance Regulatory and Development Authority (IRDA) is finally showing results that should bring cheer back on the faces of transporters.
IRDA has now claimed that its threat of reprisal has resulted in general insurers becoming more receptive towards the proposal from transporters for extending third-party liability (TPL) covers. Feedback received by the authority also suggests that the insurers are showing more discipline in fixing renewal premium by keeping them within the stipulated guidelines.
"We now understand that the situation has improved and insurance companies have started accepting third-party liability covers," the Executive Director, IRDA, Mr Prabodh Chander, has said in a communication sent late last week to the Mr Chittaranjan Dass, Vice-President, All India Confederation of Goods Vehicles Owners' Association (ACOGOA).
The winds of change has been sighted by the authority barely a few days before it is going to meet transporters' representatives from all over the country in the presence of chief executives of all non-life insurance companies. The meeting, which would attempt to sort out the contentious issues, is due to be held on October 28.
The IRDA communication to ACOGOA has said that consequent to representations made earlier by transporters, the authority had specifically warned "each and every insurer" to desist from refusing TPL and loading (increasing) of premium beyond the maximum limit stipulated by the authority. "We have written to each and every insurer that such type of practices are not permitted and any insurer found violating the directions issued by the authority will be liable to imposition of penalty as the authority may deem fit," the IRDA has said.
In a strongly-worded letter sent to the insurers at the beginning of this month, the IRDA Chairman, Mr N. Rangachary, had warned insurers of severe action in the event of breach of norms.
The IRDA has stipulated that insurers can load premium up to 100 per cent in the first year based on the claims experience and a maximum of another 100 per cent in the subsequent year and thereafter if the claim experience continued to remain adverse. However, transporters have claimed that insurance companies have been flouting the norm blatantly by arbitrarily loading premium way beyond the limits stipulated.
Moreover, due to fear of losses, insurance companies, especially those in the private sector, have allegedly been shooing away transporters seeking TPL. A TPL cover is mandatory under the law for putting any vehicle on the road.
The IRDA has said that it would continue to take up the cause of the consumers of motor insurance products by putting a leash on all errant insurance companies. "We will continue in our endeavour to ensure that insurance covers are available to consumers at a premium fixed by the Tariff Advisory Committee (TAC). You (ACOGOA) could always bring to our notice in case of violation of the direction issued by the authority," the IRDA has said.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line