Page 22 - Insurance Times May 2020

c) IIB- FLEXA Rates have been in use for 8 Occupancies for Electric Generation stations as against only 2
(36 Risk codes of erstwhile All India Fire Tariff) based of Erstwhile AIFT and 9 Risk codes for Engineering
on an earlier mandate by GIC Re effective 01st Workshop as against only 2 recognized under
March 2019 and now this practice extends to Erstwhile AIFT.
complete Risk List of Erstwhile All India Fire Tariff.
c) The current schedule 3 expanded it to 291
d) Following the decision to implement the IIB module occupancies thus discovering Rates for almost all
of Rates only for all occupancies in Fire department of Erstwhile AIFT Risk Codes. IIB but could not
from 1st January 2020, Insurers' current practice publish Rates for only 8 numbers of occupancies of
of using different versions of Fire Rates viz. In-house AIFT due to inadequate data. GIC Re, however,
Guide Rates / Discounted Erstwhile AIFT Rates / notified rates for those missing 8 also by aligning
Individual Insurance Company's Loss Costs Rates - the rates of Risks having similar hazard profile.
all will be absolutely discontinued. Thus the IIB FLEXA Loss Cost schedule in all has
contained the Rates for 299 Occupancies as against
2. The Rating Logic of All Occupancies: The Premium /
Policy Rate calculation in respect of All the Risks/(s) 237 of Erstwhile AIFT.
occupancies shall be as under: 4. General Provisions:
a) FLEXA Rates shall be as per IIB Schedules, which a) Applicability of Minimum NATCAT Pricing : If the
ever are current and shall be without any discount. Insured wants to delete STFI or EQ or both , it can
PLUS be allowed but the Policy Rate in such cases shall
not be less than the applicable NATCAT i.e.
b) Natural Catastrophe NATCAT (STFI/EQ) rates (STFI+EQ) price.
without any discount, wherever NATCAT cover is
opted for. b) Advancement of Policies expiring on or after 1st
January 2020 to a prior date in December 2019 ,
c) In case of IAR / Mega Policies the following to derive current discounting practices ,either as
Minimum Rates are to be additionally charged.
Premature renewal with cancellation / without
MBD 0.25 per mille cancellation as a parallel policy to the existing
MLOP 1 per mille * * Rates are irrespective policy as a fresh Policy suppressing the renewal
information; is barred. It can be allowed if fully
FLOP 100% of Fire rate* c of indemnity periods
compliant to above new pricing practice.
harged (i.e. 11B + NAT
CAT or IIB Rate) c) Breach of any of the above regulations in any Policy
bars its cession into RI treaties.
d) The Total Rate so arrived i.e., (item a+ item b+ item
c) may be further appropriately loaded with These changes had been brought to the notice of all the
Company's Procurement / Management expenses Operating Offices of all the Insurers immediately, for their
or any other relevant cost to arrive at Final Rate - notice, implementation & strict compliance.
that means the rates given by IIB now is to be
mandatorily applicable to all Fire Insurers
operating in Indian market and is the bare
minimum.
3. Characteristics of Schedule 3 of Insurance Information
Bureau of India (IIB) FLEXA Loss Cost schedule are given
as below:
a) IIB has published the latest version of FLEXA Loss
Costs Viz Schedule 3 vide their Release dated 21st
November 2019 with validity from 1st December
2019 and it superseded their all earlier versions.
b) The IIB, in the Schedule 3, split/demerged some of
the AIFT occupancies into multiple Risk codes
responding to Industry's needs and availability of
data. As a result, there will be now 7 Risk Codes

22 The Insurance Times, May 2020