Irda shelves detariffing of motor risk

The Insurance Regulatory Development Authority (Irda) has decided against detariffing motor insurance from April 1, 2005.

C S Rao, chairman, today said, "We are taking a relook at the detariffing issue and have decided against introduction of detariffed premium from April 1, 2005 as was earlier decided."

To test the market in a detariffed scenario, Irda had earlier decided to unregulate premium for own damage portion of motor vehicle insurance.

"Insurance companies both from the private and public sector had requested detariffing of the entire insurance segment at a go, but we at Irda do not subscribe to the idea," he explained.

"With oil prices rising in the international market and the dollar getting devalued, it was also not the right time for detariffing," he said.

"There are issues of convulsion, large scale undercutting that needs to be address if the sector if opened up and the committee on detariffing along with Tariff Advisory Committee and the General Insurance Council will once again prepare a fresh roadmap in consultation with the industry," Rao said.

Rao also said that Irda along with insurance companies were yet to decide on the next date of implementation.

"We would now take a fresh look at the issue and decide once again on which segments to be detariffed initially. Segments like marine hull, restaurant and commercial establishments, hotels and restaurants could be taken up to begin with," Rao said.

Rao told reporters at the sideline of an insurance conference on India's Insurance Sector: Challenges, Opportunities and Solutions - bench marking for the future organised by the Indian Chamber of Commerce, in Kolkata today.

"We had readied a roadmap for detariffing the entire insurance segment but insurers are not very happy with the map we decided. Taking this into consideration we decided against out initial plan," he added.

Insurance premium on any product till date is decided by the TAC with detariffing, the companies would be free to fix premium for their insurance policies.

The chairman also said that Irda was looking at allowing standalone medical insurance companies to operate in India.

"We are in the process of collecting data from third-party administrators and certain segment of the industry. Iraa will also have look into the capitalisation and solvency issues of these companies if they are allowed to operate," he said.