Insurers told not to lower premium by more than 10% on motor own damage. | |
| The Insurance Regulatory Development Authority of India (Irda) wants to ensure general insurers don't engage in a free-for-all when controls on premiums on insurance covers for motor, fire and engineering are lifted from January 1, 2007. |
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| To prevent general insurers from engaging in cut-throat competition, Irda has asked general insurers not to lower insurance premium by more than 10 per cent on motor own damage covers and upto 20 per cent on fire and engineering. |
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| General insurers would be free to price their covers within these floors till they get approvals for their revised products filed with the Irda. |
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| Lifting of price control, that is, detariffing of the general insurance industry will kickstart from January 2007. Insurers are filing their rates for fire, motor and engineering policies under the file and use guidelines with the Irda after which they will have to wait for a month for the regulator's approval. |
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| Irda, in a letter issued on 15 December as part of the guidelines on file and use requirements for general insurance products titled 'issuance of notice for renewals due in the month of January 2007, says, "As regards with the motor own damage cover the authority has decided that any changes to the current tariff own damage premium rates shall be filed by the insurance companies with proper justification. |
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| However, insurance companies can go ahead with the issuance of motor renewal notices for January 2007 without waiting for IRDA's formal approval of the rates filed if the proposed reduction in own damage rates is less than 10 per cent of the current tariff rates. If the proposed reduction is more than 10 per cent then prior approval of the authority will be required.' |
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| On the same lines for renewing a fire policy, the notice says, "If the proposed reduction is more than 20 per cent than approval of regulator is required under file and use guidelines. However the companies may issue renewal notices restricting the reduction in rates to 20 per cent of the current appplicable tariff rates if they so desire." |
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| According to C S Rao, chairman, Irda, "This notice is for renewals that happen till the products are filed and approved. Insurers had asked us what they should do if policies come up for renewals while they are waiting for product approval. We have told them that they can issue a renewal letter to the client and don't need to justify the rates if they are offering not more than 10 per cent reduction of the current tariff, in case of motor own damage, and maximum up to 20 per cent reduction incase of fire and engineering policies." |
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