Plan To Hike Gic Premia On Motor Insurance

Mittal, who took charge yesterday, is set to bring about sweeping changes in the working of the corporation. GIC, after the departure of S V Mony, has largely remained inactive and unresponsive to the needs of the industry and other insurers.

Sources said Mittal has already laid out the agenda of reforms, beginning with a meeting of the consultative body for industry, so that all probable cases of risk to the industry are discussed and methods charted out for the introduction of the all risk policy prevalent in other countries.

Mittal will also introduce a wider cover area under risks available globally. This includes first loss insurance, catastrophe insurance, insurance policies with high deductibles and the all risk insurance.

The new chairman has stressed on the need for efficient servicing of policy holders. He has also welcomed privatisation of the insurance sector, saying it will lead to better products being offered to policy holders and bring a wider are under the insurance cover.

An important planned is a hike in the premiums for the motor vehicles insurance. According to sources in the insurance industry, the amount of funds set aside for the motor vehicles insurance was far lower than the claims, which is why there was a large loss to the insurance sector. The funds were only recently revised but they are stated to be still not sufficient to meet the claims from holders of this insurance policy. The proposal for a hike in the rates was made a few years ago by the insurance industry, but has been largely ignored by the finance ministry so far.

Mittal has decided to speed up the process and get a nod from the finance minister to hike the rates.

Sources said this might happen very soon as there were indications to this effect from the government. Mittal is seeking to correct the position that he would rectify the present trend wherein larger insurance companies from abroad are interested in underwriting for only large industrial groups, market sources said.