The Insurance Regulatory Authority of India (Irda) is planning to commence the process of deregulation of tariffs in the general insurance sector beginning with the commercial vehicles business.
Irda chairman N Rangachary who is also the ex-officio chairman of the tariff advisory committee said he has asked the TAC to study the impact of detoxification of the commercial vehicles business.
The insurance regulator had earlier said it intends to completely free the tariff fixation of insurance policies over the next two-three years.
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At present, in case of five segments _ motor, fire, marine hull, engineering and workmen compensation _ of the general insurance business, tariffs are regulated by the TAC.
After the TAC secretary reviews the viability of deregulating the commercial vehicles business, the matter would be referred to the technical committee of the TAC and based on the panel's recommendations, a final decision would be taken.
They added that it could take up to six months for a final decision to be taken.
Irda officials, however, added that a review of the commercial business is not on account of the protests made by some sections of transporters. The idea is to make the business more attractive for the private players and leave it for the market forces to determine the tariffs, said an official.
At present, the private sector insurance companies are shying away from providing cover to the commercial vehicles segment on account of the high claims ratio, which is upwards of 100 per cent. The claims ratio is expected to decrease due to the implementation of the new All India Motor Tariff schedule from July 1.
The motor portfolio of the general insurance industry in India accounts for nearly 38 per cent of the gross domestic premium. While premium abroad ranges from an average of 6 to 12 per cent of the value of the vehicle, in India it is just about 3 per cent.