The Hindu Business Line : Detariffing transition in non-life segment to be smooth

The Insurance Regulatory and Development Authority (IRDA) will take all the necessary steps to ensure a smooth transition towards de-tariffing in the non-life segment of the Indian insurance sector.

According to the IRDA Chairman, Mr C.S. Rao, the proposed de-tariffing in general insurance industry would lead to a major shift in the focus of insurance companies from corporate business to individuals, resulting in higher insurance penetration in the country.

He was of the view that all these years the insurance companies neglected individuals, who would now get benefited through de-tariffing. Addressing a day-long seminar on `Detariffing in insurance - Issues and challenges' here on Saturday, he said the regulator was considering the de-tariffing as significant as opening up the insurance industry for the private participation five years ago.

On the apprehensions pertaining to the preparedness of the non-life industry, especially the public sector, to the de-tariffing, Mr Rao said the regulator had announced roadmap in September 2005 on the de-tariffing to come into effect from January 1.

"We have told the industry 15 months in advance to get prepared for the de-tariffing. If anyone is not ready even then, they will never be ready. We are taking all the necessary steps to ensure a smooth transition towards detariffing. The ultimate objective is to protect the interests of the insured," he said.

Sovereign guarantee

Allaying the apprehensions on the Government's proposal to withdraw sovereign guarantee offered to the Life Insurance Corporation of India (LIC), the IRDA Chairman said the public sector life insurer has grown so strong that it does not require such guarantees anymore to meet its obligations.

Amendments to Act

Referring to certain frauds of motor insurance in certain pockets of the country where natural deaths were converted into some kind of accidents to claim compensation, he said the Union Ministry of Surface Transport is contemplating amendments to Motor Vehicles Act to plug the loopholes. Following the representations made by the insurance companies, the Ministry is planning to fix time limit for claiming the compensation and also streamline the amount of compensation.

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