The Hindu Business Line : Motor cover: Officers unhappy

The General Insurance Officers' All India Association has flayed the recent 70 per cent cut in third party insurance premium. It was widely feared that the cut would affect the bottom line of public sector insurance companies.

Mr P.P. Mohanan, Vice-President of the association, said the decision to slash the premium hike was against the interest of the four public sector general insurance companies. Already they are facing a heavy accumulated loss in this sector. In motor third party insurance, the claim ratio is more than 250 per cent, a press release issued here said.

Even a 150 per cent hike in third party premium is not sufficient to mitigate the heavy underwriting loss, the association said. As such, due to the premium cut the insurers would be facing a loss of Rs 1,000 crore.

The association warned that if the third party premium remains unattractive, the private insurers would not give the mandatory third party policies. The burden would eventually fall on public sector companies. It said that the Government had given in to the pressure of truck owners' associations and its employees.

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