Irda moots self regulatory body for general insurers

Insurance Regulatory & Development Authority (Irda) is in the process of setting up a self regulatory organisation (SRO) in association with industry players.

The body will act as a second tier regulatory structure under Irda and will take up general insurance related issues. Irda member, non-life, Mathew Verghese, said: "We are meeting general insurance players to detail the structure and the formation of the SRO."

"The body will look into issues and practices adopted by general insurance companies and pave the way for the introduction of a detariffed regime in the general insurance industry," he explained.

Verghese said Irda was looking at the possibility of introducing detariffication in phases, starting with motor insurance.

"We are talking to the industry on various issues involving detariffing. We need to be cautious because there are instances where detariffication was called back in some countries following the failure of the system," he explained.

"Since it was not always possible for Irda to have a large network and look into all general insurance related issues, an SRO would help in looking into issues," Verghese said.

"The SRO would be christened General Insurance Council. To begin with, it would not have regulatory powers but the plan was to provide some sort of regulatory powers at a later stage," he explained.

Verghese said insurance was becoming more complex with sophistication in technology, more and more complexities in the nature of business, cross border acquisitions of industries and trading.

At the same time it is doubtful whether the sales force is well informed and equipped enough about the intricacies of the policies to do justice to the insuring public.

Talking about liability risk, Verghese said despite liability risk not being new to India, the local industry has not been able to cope with increased demand for such risk in the last one decade with the result that only a few companies are able to meet demand with the support of overseas reinsures.

"It is high time to build a data base, develop underwriting and claims handling skills as well as some capacity locally. Indian insurers cannot be mere fronting companies any longer," he said.