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C. Shivkumar

Bangalore , Dec. 7

PUBLIC sector insurers strapped for data are unable to support their case for hike in premiums in certain segments of motor vehicle insurance.

Sources said that none of the public sector insurers are networked fully to generate the kind of data required to support their claims that the commercial vehicle third party segment was one of the major causes for high claims ratios.

So far, most of the public sector insurers have been arguing that the bulk of the claims have been from the motor vehicle sector, commercial vehicles in particular.

Annual claims ratios on the motor insurance portfolios alone are in the region of above 150 per cent on a consolidated basis.

Since bulk of the data compilation is still done manually, getting the disaggregated information on the motor insurance segment is an enormous exercise involving a considerable amount of time.

According to the sources, none of these insurers is in a position to the support the claims with empirical data to the Tariff Advisory Commission (TAC) of Insurance Regulatory and Development Authority (IRDA).

"There is no denying the fact it is motor insurance that is bleeding the public sector companies. But to hike the premiums we need to substantiate it with a management information system and data," a top public sector insurer said.

Inability to submit this data to the TAC was one of the major reasons for the delays in hiking premiums on motor insurance - especially in particular commercial vehicles, the sources said.

Few of the offices of the four public sector companies - New India Assurance Company, United India Insurance Company, National Insurance Company and Oriental Insurance Company - are networked to generate the kind of data required.

"Besides, their participation in the motor insurance is a statutory obligation," the sources said.

Consequently, if the public sector insurers incur losses on this portfolio, there is no way to avoid it.

In the past, none of the insurers had complaints on such large losses. This was partly because of the fact they still had large `fall back options' in the form of a consistent pool of investment incomes.

Such investment incomes were substantial enough to cross subsidise losses. But they have been falling on an incremental basis in view of the lower returns on Government securities.

Besides, some of the social sector obligations have now fallen into the non-performing asset category where realisation is in arrears.

This means that the cross-subsidisation options have also considerably shrunk or are no longer available.

Accordingly, the companies are now moving to accelerate the installation of MIS. But even at this accelerated pace, full networking of the four companies is unlikely to be completed till 2005.

The companies are reconciled to the fact they would have to accept the losses till then.

However, the sources said, the private sector is focusing entirely on low claims sectors, which allows them greater premium retention rates.

The public sector insurers have sought the IRDA's intervention to enforce statutory obligations on the private sector as well. " Only then can there be a genuine level playing field."

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