Non-life insurers to meet DFS secy for revision in motor third-party rates

Non-life insurance companies are set to meet Department of Financial Services (DFS) Secretary M Nagaraju on May 7 to seek reduction in obligatory cession of business to state-owned GIC Re and revision in motor third-party (TP) premiums, among other things, sources aware of the development said. 

The sources also indicated that industry executives were also likely to discuss growth trends of the general insurance industry over the years as well as initiatives by the General Insurance Council, including the common empanelment of hospitals and claims settlement experience of the insurers. 

Cession is the portion of insurance premiums that insurers pass on to a reinsurer, in this case GIC Re. The Insurance Regulatory and Development Authority of India (Irdai) had retained the mandatory cession in favour of GIC Re at 4 per cent for the financial year 2024-25 (FY25). As of December 31, 2024, obligatory business accounted for 39 per cent of GIC Re’s domestic business. 

Companies are also likely to discuss revision in motor TP rates that have not been revised for the last two successive years, and request for a relief in health insurance GST (goods and services tax), which currently stands at 18 per cent. The general insurance industry has been asking for revision in health insurance GST rates. 

According to the Motor Vehicles Act, 1988, third-party insurance is mandatory, covering liabilities if a vehicle causes injury, disability or death. The insurance regulator has mandated insurers to underwrite a certain amount of vehicles to expand insurance coverage in the country. 

Motor TP rates are jointly determined by the Ministry of Road Transport and Highways (MoRTH) and Irdai. The industry has made several representations for revision in TP rates. 

LIKELY AGENDA OF MAY 7 MEET

 

*  Executives may discuss growth trends of general insurance industry over the years

 

*  GIC initiatives like common empanelment of hospitals and claim settlement experience may be brought up

 

*  Companies may seek relief on the GST levied on health insurance