The Hindu Business Line : Motor pool solvency under close watch

The council, a grouping of all public and private sector general insurers in the country, has formed committees within for streamlining underwriting, claims and investments of IMIP.

The IMIP administered by the national reinsurer, General Insurance Corporation, came into operation from the beginning of this year.

IMIP's operation is IT-driven. The software solution was implemented by TCS. This pool has begun the process of taking over third party risks of all public and private sector insurance companies operating in the country.

The pool manager, GIC, had sought a greater role of the participating non-life insurance companies, sources said. This was for ensuring that the required solvency of the pool was maintained at well above the margin of 150 per cent prescribed by the Insurance Regulatory and Development Authority.

Claims ratio

Currently, third party motor covers have a claims ratio of upwards of 150 per cent. Sources said the committee would work out ways and means of tightening claims settlement processes to minimise leakages and realise a positive underwriting margin for the IMIP.

In the initial stages however, all insurers would support the IMIP, through a reconciliation process put in place by the pool manager. IMIP claims are to be settled on a weekly basis. The council, sources said, would also work out ways and means for investing the funds received into the pool.

The sources said that given the fact that liquidity was of primary importance in the IMIP business, bulk of the investments were expected to be made only in government securities. But some treasury management would also be encouraged to make IMIP profitable on a standalone basis. This was also to ensure that the IMIP eventually had investment returns that would help it buffer from any large claims shocks in the future as in the case of the existing public sector insurance companies.

Underwriting losses of insurers are buffered by profits made from investments and treasury operations.

A similar investment management would also allow the IMIP to be eventually upgraded and converted into a specialised motor insurance company, sources added.

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