Financial Daily from THE HINDU group of publications
Saturday, Jan 31, 2004
Money & Banking
`Third party motor claims as high as 300 pc'
Mr C. S. Rao (right), Chairman, Insurance Regulatory and Development Authority, in conversation with Mr H .S. Wadhwa, CMD, National Insurance Company Ltd and Chairman, General Insurance (Public Sector) Association of India, at the annual conference on Insurance 2004 in Kolkata on Friday. - - Parth Sanyal
Kolkata , Jan. 30
MR H.S. Wadhwa, Chairman of the National Insurance Corporation Ltd and Mr C.S. Rao, Chairman of Insurance Regulatory & Development Authority (IRDA), locked hornson the controversial issue of third party motor insurance.
Mr Wadhwa, who is also the Chairman of General Insurance (Public Sector) Association of India, claimed that only public sector companies were bearing the burden of this loss-making business and private sector players were shying away from it.
Mr Rao accepted that there were problems in the third party insurance business but added that IRDA, as a regulator, had already issued directives to all insurance companies that they could not refuse this business. However, the authority is yet to receive any formal complaint from any one.
The two were present at the annual insurance summit of the Bengal Chamber of Commerce and Industry.
In his address, Mr Wadhwa said that the claim ratio of third party motor insurance business was as high as 300 per cent and currently all the public sector insurance companies are cross-subsidising this business with others.
"We must be allowed to raise the premium or other insurance companies should be asked to participate in this business and share the burden. There must be level playing field between all the players," Mr Wadhwa said.
At an impromptu press conference, Mr Rao said that there was no discrimination against public sector companies but they would have to bear most of the burden as their market share was around 86 per cent-87 per cent. Moreover, the public sector players have larger presence in the market through their wide branch network.
He ruled out any fixed obligatory percentage for the private sector players on the third party motor insurance business. According to him, this move may lead to a negative effect.
When inquired whether de-tariffing is a solution, he said: "The two should not be interconnected. While de-tariffing the insurance business we will have to consider that the players are not affected as it would harm the interest of the insured customer."
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