Page 28 - Insurance Times September 2015 SAMPLE
P. 28
WHOSE COST
IS IT ANY WAY?
K. Govindan
CEO & Director,
Insutech Insurance Broking
Services Pvt. Ltd.
Ahmedabad
The non-life insurance indus- surers, as expected, was to resort to As could be seen, the insurers gleefully
try evolved into tariff free mindless price cutting of their products ignored the cautioning and conve-
regime since 2007 exposing totally oblivious of the need at least for niently adopted the simplistic method
its players to intense mar- comparable risk improvement. of price cutting which, though prima-
ket competition. According to Insur- rily beneficial to insuring public, was
ance Regulatory and Development Au- The insurers in their overmuch concern self-defeating for the insurers. Para-
thority (IRDA), detariffing would com- either for retaining their business or as doxically, the non-existent tariff contin-
pel the insurers to develop better risk an attempt to satiate their passionate ued to be referred to for the purpose
management practices, scientific pric- appetite for new portfolio chose to ig- of allowing such discounts.
ing of products and to devise innovative nore all norms of underwriting and tried
customized products. to book business at abysmally low rates The ever increasing discounts so doled
of premium. out over a period of more than half a
In the free market regime, the insur- decade, reached to a point that in the
ers are mandated to file all their prod- It ought, however, to be mentioned case of property insurance like Fire and
ucts with their pricing with the Author- here that while doing away with the Allied Insurance, the risk rate charged
ity under "File & use" regulation before erstwhile administered pricing mecha- was virtually a negligible percentage of
they are introduced in the market. nism, the Authority had very clearly in- the erstwhile tariff rate.
Thus, detariffing had provided the best dicated to all industry players about the
opportunity to insurers to launch their need for them to develop their own The period also witnessed substantial
products with their own pricing. pricing structure based on their under- discounting of premium rates for other
writing experience and giving due con- classes of insurance such as Marine, En-
However, the immediate reaction of in- sideration to industry dynamics. gineering, Misce. and Group Health
24 The Insurance Times, September 2015
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