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K. Giriprakash

Bangalore , June 21

THE spectre of a detariffed automobile insurance scenario is galvanising general insurance companies into lobbying with various State Governments across the country, insisting on tougher licensing norms for new drivers.

With detariffing norms set to hit the automobile insurance sector first from April 1 next year, insurance companies say that unless stringent norms are put in place before issuing driving licences, it will be tougher for the companies to rate the drivers before calculating the premium.

Sources in National Insurance Company said that though the current licensing norms are adequate, officials do not enforce them strictly. This has led to letting several unsafe drivers loose on the road.

Insurance companies also say that while insurance premium from the next year will be largely based on parameters like age, health record, profession, driving track record and even habits, it was necessary to detect unsafe drivers at the licensing stage itself.

For example, under the detariffed regime, insurance companies can fix premium based on the risk a driver carries in terms of age and whether the driver has an accident-free driving record.

"Enforcement of norms and making them watertight will ensure that most of those who get the licence really deserve to drive on roads and also making the job easier for insurance firms," said an insurance company official.

While stricter enforcement of licensing norms are important for the detariffed insurance scenario to work effectively, India enjoys the notoriety of recording the highest number of road deaths anywhere in the world, according to an insurance company official.

While the motor insurance portfolio is the fastest growing sector, it is also a portfolio which bleeds them dry, year on year. According to National Insurance Academy studies, for every rupee collected as premium for motor insurance in India, the outgo in respect of damage to the vehicle is around 70-80 paise, with over Rs 3 incurred with respect to death and personal injury.

"This fact alone shows the need for tightening licensing norms. So, while Indian auto companies put more and more cars on the road year on year, the Government on its part needs to ensure that new drivers who are issued licenses make the roads a safer and better place," said a source in a private general insurance company.

Representatives from various auto insurance companies are learnt to be looking at a joint platform to take up the issue with the various Governments. But time is running out for these insurance firms, as the detariffed regime is just nine months away.

More Stories on : General Insurance | Roadways

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