The Hindu Business Line : Truckers move Ministry on motor cover premium hike

IN a sharp reaction to the Insurance Regulatory and Development Authority's (IRDA) view that motor premium can be increased by insurers even in the absence of claims in the preceding year, the transport industry has sought the intervention of the Ministry of Shipping, Road Transport and Highways (MSRTH) for an early resolution of the dispute.

In a communication to the Road Transport Minister, Mr T.R. Baalu, the Vice-President, All India Confederation of Goods Vehicle Owners' Associations (ACOGOA), Mr Chittaranjan Dass, has requested that appropriate initiative should be taken to "help defuse the situation from becoming volatile." Pointing out that the IRDA view would adversely impact the interest of truck owners, Mr Dass said this would result in "exonerating the insurance companies of all their blatant violation of the (earlier) IRDA orders."

The IRDA Chairman, Mr C.S. Rao, had earlier this month written to ACOGOA stating that insurers were free to hike premium rates even in the absence of adverse claims experience.

He said that this was because a matrix prepared earlier for judging the extent of annual premium hikes not only took into consideration the claims experience but other adverse factors too.

In a separate communication to Mr Rao, Mr Dass pointed out that the matrix was devised with the specific intent of ensuring that insurers do not resort to an automatic 100 per cent increase, which was the maximum hike permitted each year by the earlier IRDA order.

The 2002 order of IRDA had said that in the event of an adverse claims experience, insurers were allowed to increase premium rates by a maximum of 100 per cent in the first year, which could go up to another 100 per cent if the bad claims experience continues. However, no hike beyond the limit was permitted.

"The matrix was specifically intended to cover the grey area in the IRDA's order which could be exploited for invariably loading 100 per cent in all cases," Mr Dass has said.

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