Money & Banking

IRDA asks general insurers to increase motor third party pool reserves

| Updated on: Mar 14, 2011
image caption

The Insurance Regulatory and Development Authority (IRDA) has directed all general insurance companies to increase their motor third party insurance pool reserves in a phased manner.

The increase should facilitate them to reach a solvency ratio of 150 per cent by March 2014.

“The pool reserves have to be significantly augmented in order to meet the higher compensation to be paid to the unfortunate victims of road accidents,” Mr J. Hari Narayan, Chairman, IRDA. said in a circular sent to general insurers on Monday.

The Authority had conducted an actuarial valuation of the Integrated Motor Third Party Insurance Pool (IMTPIP) to assess the adequacy of the reserves.

“The ultimate loss ratios are 172.3 per cent, 181.81 per cent and 194.15 per cent for the years 2007-08, 2008-09 and 2009-10 respectively,” the Chairman said.

Against this estimate, the pool had maintained reserves at 126 per cent for all the years and had underwritten third party motor liability.

Solvency ratio

All the general insurers, including General Insurance Corporation, should maintain a solvency ratio of not less than 130 per cent for all lines of business as on March 31, 2011, the IRDA said.

The solvency ratio should be maintained at not less than 137, 145 and 150 per cent for all lines of business not later than March 31 of 2012, 2013 and 2014 respectively.

The Authority had also asked the general insurers not to declare dividends to the shareholders without the prior specific approval of the Authority for any year or part of the year wherein the solvency ratio is reported below 150 per cent.

Published on March 14, 2011

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

COMMENTS
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you