The Insurance Regulatory and Development Authority (Irda), has reduced the fee paid by the non-life insurance companies to General Insurance Corporation of India (GIC) in order to manage the motor third party insurance business.
In a recent statement, Irda said that the administrative rate for the motor third party insurance has been halved to 1.25 per cent from 2.5 per cent effective from April 1, 2009.
Insurers paid 2.5 per cent of the total premium of the business underwritten for the pooled account since December 2006 to GIC the administrator of pool.
The total accretion of the pool stood at Rs 3,000 crore, and insurers paid an aggregate of Rs 75 crore to the pool administrator, depending on their market share. Going forward insurers will have to contribute Rs 37.5 crore to GIC. Other terms and conditions are remained unchanged.
Motor third party insurance has been a bleeding portfolio for general insurers. They blame it on the high claim ratio and lower premium charged.
Irda had constituted this pool after complaints from commercial vehicles owners on unavailability of motor insurance cover and insurers’ difficulty in underwriting this business without permission to charge different premium rates.
