Pvt risk firms unfazed by state peers stand on car labour charges

Private general insurance companies are not perturbed by the current situation wherein the state insurance firms have settled on labour charges with auto manufacturers.

Private insurance companies have a king-size share of private motor claims. Though the total motor claims have crossed 15,000, over 50 per cent of the private vehicles are insured with private insurance companies, number well over 6,000.

Following the failure of auto manufacturers and insurers to reach a compromise on labour charges, engineers of private insurers met today.

The technical group examined the list of jobs that auto firms have asked their respective service stations to undertake and then decided on the manhours for the same.

Rates offered by private insurers amount to about one-third of agreed charges. This runs contrary to the agreed labour costs between state insurers and auto manufacturers.

"Earlier too, there has been a practice of differential pricing between various insurance companies, with each insurer negotiating individually with the dealer," said Sanjiv Sharma, national claims manager.

The issue of payout will have important repurcussions as insurers will not be able to raise motor premiums next year since India is a tariff-based market, said Shrirang V Samant, CEO, HDFC Chubb General Insurance Company.

Dealers are arm-twisting insurers and demanding inflated labour costs.

The situation has worsened as the state insurers are willing to pay higher charges, almost thrice that of what we perceive as being reasonable, said the engineer of a leading Western India headquartered private insurance company.

The state insurance companies, under pressure from the finance ministry to settle claims, have compromised with the auto dealers.

Willing to pay as much as three times what private players offer, state insurers are trying to ensure claims of their customers are settled promto.