Tac Told To Ease Underwriting Regulations

The Tariff Advisory Committee (TAC) has been asked to intervene and facilitate the underwriting of motor renewal business by the general insurance executive council body. The demand put forth to the TAC by the non-life players, has been to permit vehicle owners to submit a simple declaration as proof of no past claims.

This negates the present regulations which require receipt of renewal notice and proof for no claim bonus from the existing insurer, before the business can be switched over to the competitor. This is necessary should the vehicle owner wish to take advantage of a discount on the premium in the case of no past claims.

 

New insurers are willing to underwrite existing motor business, but face difficulty with the existing TAC stipulations. Many are currently willing to accept "a declaration" from the owner of the vehicle that he has not put in any claims in the past. They hope that TAC will rule to permit business to be transferred on the basis of a declaration from the vehicle owners.

"It is not that the state players are trying to make things difficult for us. It is just a question of not being able to on account of bureaucracy," said Royal Sundaram Alliance Insurance Company (RSA) vice president Richard K Schofield. Moreover, there is no centralised database for policy records at the state insurers.

RSA has accepted a few transfer of policies after the difficulty in getting the renewal notice from the existing insurer. This helps validate owners' claims of a clean track record on a case-to-case basis. Vehicle owners do not wish to let go the discount they are eligible for in the event of no past claims, said Schofield. He added: "We are working with the council to remove this barrier".

The attraction of underwriting existing business lies in the fact that "loss ratios is lower in old vehicles than in new ones. Vehicle owners are so particular and lodge claims for bills as less as Rs 800 for a scratch in the case of new vehicles, than in the case of an old car," said a senior official from a non-life new insurance player.

New players have since commencing operations, been underwriting fresh motor business through tying up with car dealers. This is relatively easier for the new set ups, than chasing individual customers, with their limited distribution network.