The Hindu Business Line : De-tariffing of motor cover from April unlikely

DE-TARIFFING of motor insurance is not likely to be implemented from April 1. This is IRDA's (Insurance Regulatory and Development Authority) latest stance on the matter, given the feedback it has received from insurance companies.

The regulator is willing to take a fresh look at the subject at a more opportune moment, said Mr C.S. Rao, Chairman, IRDA, adding that meetings had been lined up with the parties concerned for later this month.

The development may also be seen in the context of the recent increase in fuel prices; and as things stand now, no new deadline has been fixed.

IRDA, which claims to have made a "modest beginning" in terms of de-tariffing, is considering de-tariffing in select areas - marine hull, cafes and restaurants. However, plans have not been finalised.

The regulator is in favour of `calibrated de-tariffing', complete with efforts that may be slow but sustainable. Even in certain advanced markets, tariffs exist on a selective basis, it pointed out.

The Tariff Advisory Committee, which was reconstituted recently, is now truly representative, Mr Rao said, adding that relevant experience in this area would have to be gained over time.

Earlier, speaking at a seminar organised by the Indian Chamber of Commerce, the IRDA chief referred to the developments that have taken place since liberalisation of the insurance sector.

These are reflected in the total premia collected, the contribution of the private sector, the improvement effected by public sector insurers and the marketing strategies that are being generally employed.

Statistics suggest that the insurance market has grown substantially, while the PSU players have not yielded a place to their private counterparts.

LIC, which focused on traditional products (endowment, money-back), had moved into the domain of ULIPs. Customers now have more options. Insurance intermediation has also improved, with banks and corporate agents coming up with their initiatives.

Bancassurance has emerged as a major mechanism to support insurance companies. The number of applications for broking companies has increased as well.

While corporate agencies were improving, a new set of concerns had arisen, the IRDA Chairman said, adding that agents must be fully aware of all possible implications. There must be complete disclosure as well.

Mr Rao said the regulator was examining the scope of permitting stand-alone health insurance outfits to function in the country. It is in the process of collating information from third party administrators in this regard.

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