Insurers will be free to price their products on their own from 2007, with regulator IRDA unveiling a roadmap to de-tariff general insurance business. | |
| Following the demands from insurers, IRDA has come up with a notification on de-tariffing and has mandated sufficient safeguards to ensure that premium rates should be "reasonable" so as to cover all vehicles. |
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| "Date of discontinuation of tariffs is December 31, 2006. While this note assumes that all lines of business would be detariffed, it is likely that, to start with, it may be limited to lines other than motor in view of the sizeable shares the motor premium commands in the overall premium collected by insurers," IRDA said in a directive to insurers. |
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| The roadmap assumes importance, as currently 70 per cent of general insurance products are priced at an administered rate. Apart from the roadmap on de-tariffing, IRDA said the function of underwriting and rating of insurance business should be independent of the business development function. |
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| For operating convenience, every insurer will require to have an internal guide tariff for the smaller valued risks and the simple risks. |
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| IRDA has set December 1, 2005 as the date for insurers to decide on the internal underwriting set up and the classes of risks to be governed by internal tariffs and the classes that will be underwritten individually. |
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| The insurers will have to prepare interim internal tariffs based on available underwriting information within the company by March 31, 2006. |
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