Page 23 - Insurance Times July 2019

previous year claim experience of the insurer duly adjusted and disclose the claim cost of last year and preceding two
for change in number of lives and for changes in the benefit years in the input format designed by General Insurance
design proposed for current year of the risk. IRDA in its Council of India (GI Council). This will surely improve the
advisory and prescription has made it very clear that industry- disclosure and will put insurers in a better position to assess
wide losses should be considered for pricing the product and the risk on quality data necessary to price the risk.
insurers current level experience of acquisition and
management expenses should be loaded to it. With uniform data now available to underwriters if any of
them choose to price the risk lower than burning cost, then
The industry-wide burning cost is available with IIB it will have to have the approval of its top management.
(Insurance Information Bureau of India) for Fire and Further, this will have to be filed in form of Exception Report
Property Insurance but such industry-wide burning cost for in a format to be designed by IRDA.
group health is not available. The Authority is also aware
that brokers are not disclosing all details of group health The Regulator has initiated this move to see right pricing
experience to insurers at the time of RFQ (request for coming into the market and corporate governance in the
quote). In health insurance the trend & incidence rate business behaviour of the insurers. The move signals that
usually does not vary from year to year. However, the premium for this growing portfolios would be rising or else
average claim cost bears the impact of medical inflation to there will be reduction in the benefits .
some extent. Till the IIB is ready with the industry-wide
burning cost in group health segment the authority has It is a time now to watch whether the insurers will now
tightened the reporting parameters. It has prescribed that move to a more realistic market or they are looking
the intermediary or the client will mandatory have to sign something else.

Few Burning Cost Rates in Fire Occupancy is Narrated Below:

No. Main occupancy Tariff code Tariff occupancy Burning cost
1 Textiles 5305 Cloth processing units situated outside the compound 1.05
of textile mills
8907 Garment makers, topee, hats and the like makers 0.99
10308 Hoisery,lace, embroidery/thread factories 1.17
11115 Jute mills 2.75
11512 Leather cloth factories 2.11
12104 Man-made fibre manufacturing (using cellulose) 0.65
12205 Man-made fibre manufacturing plant (Others) 0.71
13411 Non-woven fabric manufacturing 1.72
17106 Silk mills/spun silk mills 0.99
18907 Textile mills - composite mills (Composite mills are 0.82
those where activities from blow room to cloth
processing are involved)
18908 Textile mills - spinning mills 2.33
19909 Velvet cloth manufacturing 1.47
20206 Weaving mills 0.75
20705 Yarn processing 1.13

2 Plastics 8415 Foamed plastics manufacturing and/or converting 2.66
plants
14809 Plastic goods manufacturing (upto 15000 btu/ib) 1.93

The Insurance Times, July 2019 23