Page 409 - Motor Insurance Ebook IC 72

Guide for Motor Insurance

IRDA has also recommended to the government that
the concept of limited liability, which was discontinued
in 1988, should be reintroduced.

The regulator has recommended that Motor Vehicle Act
be amended to introduce a limitation period for filing
compensation claims. Third party insurance is the only
business where rates are fixed by the regulator.

The insurance companies would incur a loss of
approximately Rs 2,500-3,500 crore in the current year
(2010-11) on account of this (motor insurance)
business of which a substantial portion will be borne
by the public sector insurance companies.

If the situation was allowed to continue, there will be
a severe dent on the solvency of insurance companies
which could lead to both solvency and liquidity issues
for these companies.

Insurance Regulatory and Development Authority
(IRDA) had, in an exposure draft, proposed a review
of motor insurance premium rates for third party liability
cover. The exposure draft envisages an increase of 10-
80 per cent in the premium rates of third party motor
insurance. The IRDA has already taken views of various
stakeholders for effecting hike in premium rates.

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