Industry Weighing Risk-Cover In Four Key Areas

The Indian insurance industry is weighing the introduction of insurance policies in four key areas to combat the anticipated competition on the entry of foreign insurance companies.

The areas being examined include an industrial all-risk policy, hospitalisation and medicare, a revised motor insurance policy and policies related to project and infrastructure insurance.

Industry sources pointed out that the industrial all risk policy would entail the provision of a package scheme for all industrial policies over Rs 50 crore.

This rates of premium are likely to be pegged at lower levels compared to policies which cover individual risks.

The industrial all risk policy is a comparatively new concept in international insurance business and has started off on a positive note in countries like Malaysia and Australia.

 

It may be noted that Oriental Insurance, a GIC subsidiary has introduced the `office umbrella policy which has been structured on similar lines.

The policy related to medical insurance has not met with much success in India as there often exists a time lag between the application for the company and reimbursement of claims.

The new norms might seek the introduction of a medical identity card for the policy holder to ensure quicker disbursement of the assured sum during emergency situations.

Sources said that the motor insurance policies have come under scrutiny, as there exists wide scale cases of false claims. It has been estimated that while no reimbursement claims are received from 95 per cent of the policy holders, the balance 5 per cent avail of most of the claims. The majority holders as a result have to bear high rates of premium at the cost of this 5 per cent. Hence a re-look at the motor insurance policy is important, said sources.

The Indian insurance companies are said to be considering the introduction of policies related to booking of advance loss of profits on project and infrastructure insurance.

In fact the Enron controversy had sparked off the debate as to whether loss of profits due to delay in project implementation could be covered under a specific policy. Moreover, there Indian industry is also contemplating the introduction of covers associated with political uncertainties.

The concept has already gained momentum in the west and the absence of which has lead to loss of business by Indian insurance majors. Indian insurance companies, as a result, have to reinsure around 95 per cent of the insured sum with foreign companies.

The Malhotra committee had also stressed upon the need to improve consumer service and introduction of better choice of products by opening up the insurance to the private sector.