Gic Tariff Panel Should Open Up

The Tariff Advisory Committee (TAC) of the General Insurance Corporation will have to be recast if the chairman of the Insurance Regulatory Authority (IRA), N I Rangachary, has his way. TAC is presently constituted entirely by experts provided by GIC. This is not in tune with the concept of openness, Rangachary observed.

Rangachary suggested the insurance industry should restructure its activities and redesign work procedures to be more effective. TAC, which determines premium rates for insurable items, needs to fix prices on a more scientific basis, he said. Rangachary said the interests of the insured should be well reflected in the deliberations and decisions of the TAC.

 

In this context, Rangachary added that the TAC should have more openness which would be possible with the inclusion in TAC of representatives from industry associations, intermediates and others.

Speaking at a seminar on Insurance and Consumer Interest held here yesterday, Rangachary commended the Life Insurance Corporation and General Insurance Corporation for their work culture. The seminar was organised by Consumer Education Research Centre.

Despite the large presence of LIC and GIC in the country, he lamented that penetration of the insurance industry in the country as a whole was very poor.

He added that LIC had garnered resources of about Rs 73,000 crore and GIC Rs 6,000 crore in spite of various impediments. He cautioned against cartelisation by the players even if they were public sector companies.

However, Rangachary was less specific when dealing with the powers and functions of the IRA, which he heads. He hinted that powers of supervision and regulations vested in different bodies including that of LIC and GIC should be vested in the IRA.

Referring to various suggestions made on the Insurance Regulatory Bill 1996, he said there were two options before the government while drafting the bill. He stated that it should be a comprehensive piece of legislation with clear definitions of powers, obligations and liabilities or it should contain only the core areas on which the authority rests with IRA.

Describing the Insurance Act of 1938 as the presiding Act, Rangachary lamented the fact that it did not contain any reference to intermediaries. By intermediaries, he meant agents, brokers, consultant and loss assessors whose role should be accepted in law.

In this context, he came down heavily against the present fleet of agents maintained by the insurance companies. The LIC panel, he said, had six lakh agents though not more than 20,000 are operating.