No change seen in motor insurance rates soon

In a setback to insurers, Insurance Regulatory and Development Authority (IRDA) today admitted that the present administered tariff regime for motor insurance business is likely to continue in the next fiscal.

"We are likely to miss the April deadline (for detariffing motor insurance business)," IRDA chairman C S Rao said today.

He said that detariffing of motor insurance has to be done for both owners' damage and third party liability. "It cannot be done in isolation," he added.

The general insurance industry, particularly after the advent of private players, has been demanding detariffing of motor insurance because, according to them, the products were underpriced.

They said that with detariffing, there could be reduction in cost of insurance and would be better for both the industry and consumers.

Industry sources said insurers would be in a better position to price the odd portion of motor insurance by taking into account 30 rating factors including make and model, enginer power, age of vehicle, licensed carrying capacity, safety features and repair and replacement costs.

The road trasport industry, however, fears that detariffing could lead to an increase in premiums and thus increase working costs.