Financial Daily from THE HINDU group of publications
Tuesday, May 07, 2002
Logistics - General Insurance
IRDA clears plan for motor insurance hike
Sarbajeet K. Sen
NEW DELHI, May 6
THE Insurance Regulatory and Development Authority (IRDA) has cleared the proposal for an upward revision in motor insurance tariffs, brushing aside demands from the transport industry to keep the revision in abeyance till legal amendments to cap third party liability are put in place.
The proposed new tariffs have been forwarded by IRDA to the Tariff Advisory Committee for notification. "We have cleared the proposal to revise tariffs and have asked the Tariff Advisory Committee to notify them at the earliest," a top IRDA official told Business Line.
He said that the new structure of motor tariffs would be broadly on the lines suggested by the H. Ansari Committee. "We have suggested only slight modifications, which would not be substantively different from the Ansari Committee's suggestions," the official said. However, he did not want to disclose details of the proposed notification.
The IRDA's move to proceed with the revision of the tariffs is not likely to go down well with the transport industry. To press with their demands, a delegation from the All India Motor Transport Congress (AIMTC), the apex body of motor transport operators, met with Mr R.C. Sharma, Member (non-life), IRDA. AIMTC officials said that Mr Sharma expressed the view that IRDA's role was purely to look into the tariff revision part and that the regulator had no role to play in the process of amending the Motor Vehicles Act as is being demanded by the transport industry.
In view of the firm stand taken by IRDA, the Secretary-General, AIMTC, Mr J.M. Saksena, said that transporters might have to take the extreme step of going on an agitation should the regulator notify the tariff hikes.
"This is a very important issue for our industry on which only our managing committee is empowered to take a decision. If necessary, we will have to call an emergency meeting of the managing committee to decide on the future course of action. I have already appraised all our senior officials on the deliberations of today's meeting with the IRDA," Mr Saksena said.
Confirming his meeting with the transporters, Mr Sharma said that IRDA felt that the industry's present stance was not justified since major transport bodies were signatories to the Ansari Committee report.
"The motor transport associations were also members of the Ansari Committee. In any case, the issue of tariff hikes and revision in motor transport law are not directly linked," Mr Sharma, said. The transport industry had demanded that the hike in tariffs should be announced only after the Government is able to cap third party liability to a maximum of Rs 7.5 lakh, as per the structured compensation formula decided by a widely represented committee in 1999.
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