The Hindu Business Line : Third party insurance

This refers to the article `IRDA plans third-party risk pool for motor insurance' (Business Line, December 10). It is painful that the `bleeding portfolio' of third party insurance is currently neglected by the non-life insurance sector, due to loss of profits.

It is definitely a matter of concern for the insurance companies that the claim ratio in third-party risk cover has surpassed 200 per cent of the premia collected. The IRDA should take this into consideration while formulating the norms for third-party insurance of the commercial vehicles. The owners of such vehicles demand for further reduction of the premia amounts, which is not at feasible in the present scenario.

No company in public or private sector would be able to offer a service that results in large erosion of profits and thus weakening the capital.

Further, the capping of liabilities would jeopardise the interest of the insurers. Therefore, the third-party motor insurance scheme should exist in the larger interest of society.

C. P. Velayudhan Nair

Kochi

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