Page 9 - Insurance Times February 2016

Centre, IRDAI to crack down vehicles without TPA IRDAI to use satellite

Insurance technology for crop-loss

The Centre and the IRDAI plans to get cial data. While buying insurance is settlement
tough with vehicles plying on the roads mandatory at the time of purchase of
without insurance. "The Ministry of a vehicle, it is not generally renewed IRDAI is actively considering the use
Road Transport and Highway has from the second year onwards. of satellite re-
agreed to share data on vehicles ply- mote sensing
ing in the country with us "We are working on developing neces- technology as
to identify those without sary protocols to take this a mapping
mandatory motor third- arrangement forward," tool for agri-
party insurance", Sriram the official said, adding
Taranikanti, Executive that identification of un- cultural yield estimation and crop
Director, IRDAI, told. insured vehicles will be losses in a bad monsoon year. The
taken up in all the States move aimed at ensuring faster
The data will be shared with the IIB settlement of crop insurance losses,
regulator, which, in turn, will collabo- in a phased manner. comes at a time when the country
rate with the State police to crack has experienced back-to-back mon-
down on the owners of vehicles plying The detector of uninsured vehicles will soon failures - the first since 1986-87.
without insurance. There are about be helpful to thousands of road acci-
12.5 crore vehicles in the country and dent victims. It is also likely to have a At present, about 50 crop insurance
55 per cent of these do not have third- positive impact on the general insurers products are being marketed by the
party insurance, according to the offi- as along with the mandatory cover, Agriculture Insurance Company of
vehicle owners tend to buy other types India Ltd. (AICIL) and other general
of insurance cover, Taranikanti said. Insurance Companies.

Trade credit insurance policy to get refined IRDAI has concluded a series of dis-
cussion with stakeholders and a num-
IRDAI has recently proposed changes in IRDAI said it proposes to allow issuance ber of research studies and experi-
guidelines on trade credit insurance in of trade credit insurance policy to RBI ments are also being undertaken by
an exposure draft on 'Amendment to registered entities, for conducting fac- institutions associated with agricul-
Guidelines on Trade Credit Insurance'. toring business in line with The Factor- ture and rural development through-
The sectoral regulator said changes in ing Act, 2011. "This cover shall be re- out the country. Sources said that the
the economy, especially in micro, small, stricted to short-term financing against use of this technology / should mark
medium enterprise (MSME) sector, has receivables, representing supply of a move towards speedy assessment
increased the need for trade credit and goods, materials and services," said and settlement of crop losses.
has enhanced the scope for the credit the exposure draft.
insurance sector diversely. The south-west monsoon season of
As against the existing policy of net 2015 had registered an overall rain-
Trade credit insurance is an insurance retention of the insurer for trade- fall deficit of 14.3 per cent relative
policy offered by private insurance credit insurance of up to 2 per cent of to the 'normal' long period average
companies and governmental export the net worth, IRDAI is proposing the for June-September, making it a de-
credit agencies to business entities same to be increased to up to 5 per ficient monsoon.
wishing to protect their accounts re- cent. As per existing rules, no trade
ceivable from loss due to credit risks credit insurance policy is allowed to One of the main reasons for low lev-
such as protracted default, insolvency cover factoring, reverse factoring and els of insurance penetration in crop
or bankruptcy. bill discounting. insurance is the lack of awareness
about the insurance products and
10 companies lined up for foreign investment the benefits of various policies. AICIL
at present transacts only in crop in-
As many as 10 insurance companies have applied for regulatory clearances to surance business while other policies
bring in foreign investment of Rs.6,192 crore, the government said. On March covering various risks pertaining to
23, 2015 the Centre had notified the hike in foreign direct investment (FDI) cap farmers such as agriculture imple-
to 49 per cent from 26 per cent. "Ten insurance companies have applied to IRDAI ments personal accident and live-
and Foreign Investment Promotion Board (FIPB) and the foreign investment into stock are extended by other general
India involved in these transactions is approximately Rs.6,192 crore," Minister insurance companies.
of State for Finance Jayant Sinha said in a written reply.

The Insurance Times, February 2016 9

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