The insurance regulator IRDAI has ruled out dismantling the third party motor tariff system, which is still regulated by the the insurance regulator in the post detariffication period.
IRDA way back in 2007 had 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 after receiving the feedbacks from the insurers. .
When asked about any possibility of removing the third party motor segment from tariff regime S C Khuntia, Chairman, IRDAI, on the sidelines of the 20th Global Conference of Actuaries, 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.’’
In fact, a few years back, IRDAI had mooted a proposal to dismantle the tariff system in the third party motior 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,’’ said Khuntia.
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 Irda to tell them what to do exactly. The only thing that we have to protect policyholders' interest,’’ he said..
On the 51 per cent investment by the Life Insurance Corporation(LIC) in IDBI Bank, IRDA chief said tat the regulator has to give a timeline to the corporation 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 didn’t have such facility
“ So, we can make long-term health insurance policy for two or three years,’’ said Khuntia.
Addressing the inaugural session of the 20th Global Conference of Actuaries, KhuntiaIRDAI, said, “With the emergence of technologies like big analytics the role of actuaries will expand manifold. The role of actuaries are more important in innovating insurance product which are transparent and understandable to a common man.”
Under the direction of the IRDAI, India is emerging as a thought leader in adapting to the evolving accounting and financial risk policies around the globe (like IFRS and risk-based capital and supervision). The IRDAI has taken big digital strides in developing a ‘regulatory sandbox’, a state-of-the-art concept that aims to promote safe digital growth in the insurance industry.