Page 39 - Life Insurance Today April 2018

Insurance Regulatory

and Development

News
News
Authority of IndiaNewsNews
News

IRDAI draft norms for pri- IRDAI to reduce Motor vehicle 3rd-party premiums

ority to local reinsurers Insurance Regulatory and Development Authority of India (IRDAI) has proposed
lower rates for most vehicle categories in 2018-19.
IRDAI has come out with draft regu-
lations that re- IRDAI revises premium rates every year after tak-
quire reinsur- ing into account the number of claims made and
ance buyers to loss ratio for insurers. The regulator has proposed
give priority to Rs 1,850 as motor TP premium for private cars not
GIC Re and mul- exceeding 1,000cc for 2018-19, compared with Rs
tinationals that have branches in In- 2,055 for 2017-18. For two-wheelers not exceeding 75cc, it is Rs 427 against
dia. Insurance brokers and their cli- Rs 569 in the previous year.
ents are not very happy with this The IRDAI had hiked motor TP insurance premium by 28% for cars in 1,000-
proposal as till now they were free to 1,500cc and those exceeding 1,500cc categories during 2017-18 after propos-
approach any cross-border reinsurer. ing a 40% hike in rates earlier. Same is the case with two-wheelers in the 150-
Insurance Brokers Association of In- 350cc category, as well as those exceeding 350cc.
dia, has written to IRDAI, objecting to Motor TP premiums would remain at the same levels for private cars in the
the new rules. "The prescriptive mea- 1,000-1,500cc as well as above1,500cc categories. While the IRDAI has pro-
sures under the regulations require posed the same motor TP premium for two-wheelers in the 75-150cc segment,
the consumer to approach reinsur- it has come up with a marginal hike for those in the 150-350cc category. The
ance providers in preferred order regulator has, however, proposed a twofold hike for two-wheelers exceeding
without any choice to the consumer 350cc. The motor TP premium for these super bikes has been pegged at Rs
of the service and creating right of 2,323. A discount of 50% would be allowed for private cars under the 'vintage
first refusal (RoFR) effectively at each cars' segment as certified by the 'Vintage and Classic Car Club of India'.
category, which is extreme form of
anti-competition," the letter said. Ministry still searching for suitable candidate for IRDAI
"Choice is a fundamental right of the
consumer and this is fully compro- chairman's post
mised under these draft regulations," At a time when the government has firmed up plans to launch a mega health
the IBAI letter added. insurance scheme, the top post of insurance regulator being vacant is quite
An official with a corporate group surprising. Though many candidates have been shortlisted, the Financial Sec-
said, "We have been buying insurance tor Regulatory Appointments Search Committee (FSRASC), headed by Cabinet
on basis of support from overseas Secretary P K Sinha, is yet to finalise the incumbent for the new post.
reinsurers with whom we had busi- Keeping the top post vacant in organisation has negative effect on the devel-
ness relations for decades. The new opmental programmes and policy decisions. The head of a regulatory body,
norms force us to go to domestic whether it is the RBI or Sebi, is appointed ahead of the end of the tenure of
companies first."An IRDAI source said, the incumbent. Ajay Tyagi was named Sebi chairman two weeks before U K
maximisation of premium retention Sinha completed his term as chairman in February 2017. Raghuram Rajan was
within the country is a regulatory ob- brought in as an officer on special duty at the RBI three weeks before the re-
jective set by the government. tirement of his predecessor D Subbarao.

Life Insurance Today April 2018 39