The Insurance Regulatory and Development Authority of India (Irdai) has dropped its earlier proposal to change the norm on incurred claims ratio.
It had proposed that over a 10 per cent deviation between the actually incurred claims ratio (at the time of product filing) and what was projected should lead to a reduction in premium. General insurers and health insurers had petitioned on the move.
In its new draft norms, Irdai has proposed that in case of a deviation of more than 10 per cent, insurers will only have to file a report in this regard, with a plan of action specifying the reasons.
“In segments like motor, fire and project insurance, the claims ratio varies from year to year, depending on whether any major natural catastrophe or man-made disasters took place. Hence, we had requested that projections at the time of filing should not be taken into account for premium reductions,” said the general manager of a state-owned non-life insurance company.
Incurred loss ratio is difference between the total numbers of claims incurred and total premiums collected in that segment. If this ratio exceeds 100 per cent, the claims are higher than the premiums collected.
Earlier, the Irdai had said head office expenses in the case of an insurer having the principal place of business in India and having a branch or subsidiary outside India should not exceed five per cent of the gross premium income written directly outside. Insurers had sought this to be revised to 10 per cent and this has been accepted in Irdai’s new proposal.
For this financial year, insurers have the option to comply with the proposed regulations or the existing rules. However, from the next year, it will be mandatory to comply with the norms once the final version is released.
It had proposed that over a 10 per cent deviation between the actually incurred claims ratio (at the time of product filing) and what was projected should lead to a reduction in premium. General insurers and health insurers had petitioned on the move.
In its new draft norms, Irdai has proposed that in case of a deviation of more than 10 per cent, insurers will only have to file a report in this regard, with a plan of action specifying the reasons.
“In segments like motor, fire and project insurance, the claims ratio varies from year to year, depending on whether any major natural catastrophe or man-made disasters took place. Hence, we had requested that projections at the time of filing should not be taken into account for premium reductions,” said the general manager of a state-owned non-life insurance company.
Incurred loss ratio is difference between the total numbers of claims incurred and total premiums collected in that segment. If this ratio exceeds 100 per cent, the claims are higher than the premiums collected.
Earlier, the Irdai had said head office expenses in the case of an insurer having the principal place of business in India and having a branch or subsidiary outside India should not exceed five per cent of the gross premium income written directly outside. Insurers had sought this to be revised to 10 per cent and this has been accepted in Irdai’s new proposal.
For this financial year, insurers have the option to comply with the proposed regulations or the existing rules. However, from the next year, it will be mandatory to comply with the norms once the final version is released.
Insurers had also sought for relaxation in penal action proposed by Irdai on a violation of the expenses' limit. Irdai has retained this provision, over which restrictions on opening of new places of business may be imposed.