The Hindu Business Line : Insurance regulator

This is in response to the article “Tasks ahead for the insurance regulator” (Business Line, August 12). The pricing of insurance products in the property and casualty insurance in this country has not traditionally been done on actuarial practices but on the advice of the TAC which is abolished by the Regulator.

The TAC used to collect the statistical data that should help it to advise properly. In the de-tariffing regime, it is for the prudence of the insurance company to develop its own data and price the products on sound scientific and commercial lines.

The competition here should make any insurer to quote competitive prices with the flexibility available in the component of management expenses.

With regard to the suggestions made in the article, the line of thought — as evident from the article — is in consonance with the general politico-social practices of the country where appeasing the public with some sort of sops is the order of the day.

Insuring only healthy lives does not defeat the principle of insurance. Insurance is a vehicle to replace the economic value that is at stake due to impairments and deaths that fall upon the otherwise healthy people contributing to the society.

Insurance cover is provided to the physically impaired also, provided he/she is earning. Insuring is only for the healthy and insuring unhealthy or the sick amounts to charity.

P. V. S. Naga Raja Rao e-mail

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