The Insurance Regulatory and Development Authority of India (IRDAI) has ruled out dismantling the third party motor tariff system, which is still regulated by the insurance regulator in the post detariffication period.
IRDAI had, way back in 2007, deregulated the pricing of the entire range of insurance products except the third party motor premium. Every year by March 1, the IRDAI unveils the new third party motor pricing for the year.
When asked about any possibility of removing the third party motor segment from tariff regime, S C Khuntia, chairman, IRDAI, said, “Often general insurers complain us that tariff was not adequate and they are bleeding due to the loss making portfolio. However, if it is detariffed, a cut- throat competition will begin.” “We are looking at various options on the issue,” he said on the sidelines of the 20th Global Conference of Actuaries.
In fact, some years back, IRDAI had mooted a proposal to dismantle the tariff system in the third party motor segment but called it off after PSU general insurers opposed the proposal. On the insurers’ exposure to the financially battered IL&FS, Khuntia said that each insurer has got different kinds of exposure in the company.
“We have said that insurers should do adequate provisioning and can’t write them off,’’ Khuntia said.
Insurers are advised to invest in high rated companies only and in case the rating comes down in due course of time, then the insurers should apply their own judgment to respond to the situation. “It is not possible for IRDAI to tell them what to do exactly. The only thing that we have to do is protect policyholders’ interest,’’ he said.
On the 51 per cent investment by LIC in IDBI Bank, the IRDAI chief said the regulator has to give a timeline to LIC by when it should bring down its stake in the bank to 15 per cent. “But we are yet to do so,” he said.
On the possibility of launching a long-term health insurance policy similar to the long-term motor policy, Khuntia said unlike life insurance where there is a life table available, the general insurance industry did not have such facility. “So, we can make long-term health insurance policy for two or three years,’’ Khuntia said.