Page 32 - Insurance Times May 2022

LET,S DRIVE

SAFELY- ITS A

DETARIFF - ZONE

T he Indian insurance industry faces multiple Preferential rating would not be possible. Thus clients, with a

challenges today. One of them is the issues
claim free track record are clubbed with those having a poor
involved in moving from a tariff to a detariff
claim record. In a growing competitive environment, can
market. The last experience, when marine
insurance awareness brings with it a discerning insuring public
insurance was detariffed in 1994, was horrendous for the insurers afford to offer a uniform rate to all? Growing
industry. The general insurance industry had no clue what who do not accept the 'one rate fits all' policy any longer.
awaited them. Premium rates touched unrealistically low
levels, leaving the industry reeling for years and dying under If one were to look at the history of the Indian insurance
suicidal competition threat. The market cannot afford a industry, major landmarks have taken place in every other
similar experience. decade starting from the 1930s till the end of the last century.
It was in 1938 the Insurance Act setting the rules and
Insurers, especially the smaller players now fear the move into regulations for the insurance market were passed. In 1956
detariff zone. The reason, first and foremost being the Indian the Life Insurance Act was passed giving birth to the Life
market does not have reliable, sufficient and detailed data Insurance Corporation of India (LIC). In 1972, the General
required for actuarial analysis and pricing. Rating, based on Insurance Business Nationalization Act was passed
limited data could mean a repeat of the 1994 experience. nationalizing all general insurance companies and organizing
them into four subsidiaries of the General Insurance
Corporation of India (GIC). In 1999, Insurance Regulatory and
About the author Development Authority (IRDA) Act was passed, opening up

the industry to Private Indian and foreign participation. The
Sanjay Singh recent changes being the IIB rates catering to the entire
MBA (Insurance),Fellow-III,DCII-London occupancies of Fire line of business and the sand box
Shriram General Insurance Co Ltd regulations promoting new and dynamic inventions in this
Jaipur field.

32 The Insurance Times, May 2022