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Sarbajeet K. Sen

NEW DELHI, May 22

DEALING a potentially debilitating blow to the plans to detariff motor insurance, the Ministry of Finance has asked the Insurance Regulatory and Development Authority (IRDA) to put a halt to the ongoing process. The Ministry has suggested that in view of the serious disagreements over the issue, IRDA should instead initiate a fresh round of discussion by preparing a `consultation paper' to evolve a wider consensus before concrete steps are taken towards dismantling the present system.

The Finance Ministry has backed its suggestion citing the serious disagreements within the Committee on Detariffing that had recently submitted its report to IRDA. Though the Finance Ministry did not find a representation in the 20-member detariffing panel headed by Mr Justice T.N.C. Rangarajan, the final report had been forwarded to it for its comments.

"The committee itself appears to be totally divided on the issue of detariffing, with several members openly expressing themselves against such a move. We have asked IRDA to prepare a consultation paper to general further discussion on the issue," a senior Finance Ministry official said.

The major recommendations of the detariffing panel were to immediately remove tariffs from the own damage segment by setting a specific time frame for the shift-over while at the same time quarantining the mandatory legal third party liability (TPL) business. The Ministry of Road Transport and Highways, the only Government arm represented in the detariffing panel, had already affixed a dissent note to the report.

Clearly expressing itself against tampering with the present tariff regime, the Road Transport Ministry had stated said "the Ministry is not in favour of quarantining of TPL business nor is it in favour of detariffing of own damage portfolio."

In fact, the Road Transport Ministry had been the first to drag the Finance Ministry into the detariffing debate by stating that the panel's recommendation on restructuring TPL as a single business "would require extensive consultation with the Ministry of Finance."

Among those in the panel against detariffing were consumer activist Prof Manubhhai Shah (who has also tagged a dissent note) and Mr Ajit Narain, CEO, Iffco-Tokio General Insurance Co and Mr R. Beri, Chairman and Managing Director, New India Assurance Co.

The proposed move also elicited guarded response from the automobile associations such as the Federation of Automobile Associations of India (FAAI) and other transporters' bodies such as the All India Confederation of Goods Vehicles Owners' Association (ACOGOA), both advising caution till the adequate supporting data is provided by the insurance companies.

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