The Hindu Business Line : Combined biz insurance policy on the cards

Cover drive
Insured can go in for as many as 10 types of covers to avail themselves of discounts.
General Insurance Council in meetings with underwriters to fix a format.
‘Library of clauses’ draws from all standardised terms accepted by international reinsurers.

Radhika Menon

Mumbai, Aug. 31 ‘Combined business’ insurance policies will soon make their way to India, as insurers are gearing up for the freedom to modify terms and conditions of fire and motor insurance policies from next year.

Internationally, a ‘combined business’ insurance policy is a package cover that insures various businesses such as manufacturing, services, warehouse, distribution, retailers and wholesalers, to offer better discounts to the insured.

Earlier, only in the case of mega risks (where the assets are valued at over Rs 2,500 crore) could corporates avail themselves of such package policies by buying the cover from the international reinsurance market. In the case of smaller companies, the insured had to buy each cover as a ‘single policy’.

Soon, even a small or mid-sized company can buy a ‘combined business’ policy, which could include marine insurance, fire insurance, burglary covers, business interruption and employers liability and public liability policies.

Mr M. Ramadoss, Chairman and Managing Director, Oriental Insurance Company, said that the insured could now go in for a combined business policy which includes as many as 10 types of covers to avail of discounts.

Insurers will have to, however, stick by the ‘library of clauses’ being drawn up by the General Insurance Council while providing the add-on covers.

Add-on options

Mr K.N. Bhandari, Secretary General, General Insurance Council, said that while the essential structure of the policy would be maintained, insurers will now be able to give a series of options by providing add-on covers to the main policy. General Insurance Council is holding a series of meetings with underwriters to fix a standardised format for all insurance policy related documents and create a ‘library of clauses’ for terms and conditions.

The ‘library of clauses’ draws from all the standardised terms accepted by international reinsurers (Munich Re and Swiss Re) and recognised by the courts of law. Insurers will not be allowed to use their own wordings and will have to refer to this exhaustive list of clauses.

“We are creating a ‘library of clauses’ based on our study of the developed economies. The aim is to ensure that the language is simple, universally accepted and that no misselling takes place. It will also allow insurers to provide tailor-made solutions,” Mr Bhandari said. “In the case of motor insurance policies, we will preserve the same format and bring in some flexibility. If a vehicle is damaged, for instance, insurers will have the option to provide a courtesy car until repairs take place,” he added.

Standardised Format

Insurers will also have to follow a standardised format for the proposal form, policy document and put in definitions explaining insurance jargon.

While insurers have been free to price their fire and motor insurance policies, since January 2007, they cannot make changes to the terms and conditions of the policy until April 2008. The General Insurance Council plans to submit the guidelines on these market- related wordings by September.

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