AIG chief for gradual approach to detariffing

Detariffing of the local insurance industry should not be rushed into. Nor should it be undertaken in a piecemeal fashion, according to Nicholas C Walsh, president & CEO American International Underwriters, AIG.

"Free-market economy is always better for the customer. At the same time there is not need to rush into this until the market is ready," Walsh said.

Currently, almost 70 per cent of the Indian insurance market is under a tariff regime, whereby prices are controlled. This has made it difficult for private insurers to offer international products in a price-conscious market.

"If the market was to open up, we would be able to get more detailed products into India," said Walsh. The Insurance Regulatory and Development Authority (Irda) had initially proposed to detariff the motor insurance segment as on April 1, 2005.

However, as the industry is clamouring for third-party to be detariffed as well, the proposal has now been put on the back burner.

India is behind its neighbouring countries Sri Lanka and Pakistan, both of which detariffed their markets some time back. Detariffing will see competition and level the market place, which today is dominated by the public sector, added Charles Bouloux, president (Middle East-Mediterranean-South Asia Division), AIG.

However, he cautioned: "It is imperative to ensure that detariffing takes place across all sectors, else it will cause distortion." Bouloux has had talks with Irda on this issue, and added that it would take about 18 months or two renewals to level the market post detariffing.

Walsh and Bouloux were in Mumbai today to witness Tata AIG's strategic alliance with TT Enterprises for the distribution of insurance products, with special emphasis on Indians moving to the US.

Speaking on the cross-subsidy taking place in the general insurance sector, Walsh said it is important that insurance companies add value by writing a strong balance sheet whereby premiums pay for costs, distribution and losses.

"That is what insurance business is all about. Cross-subsidisation does not do that," he pointed out.

AIG cover for US visits: Relocating to the US or planning to pursue higher education there? Then Tata AIG General Insurance Company has an easy solution.

For an annual membership fee of $250-300, AIG International Services (AIGIS) will provide relocation support membership programme to Indians travelling to the US. The programme will commence next month.

A major problem that faces many Indian nationals relocating to the States, be it under an H1 visa as an IT specialist, or as a college student, is the lack of identity.

With no proof of the past credit history or driving experience in the US, applying for a social security number becomes impossible, or for that matter opening a bank account and getting a credit card, said Dalip Verma, managing director, Tata AIG.

"Tata AIG will provide travel insurance, and the everything else will be taken care of under the membership programme," he added.

Through this membership, an individual can immediately save up to 50 per cent in insurance cost for motor cover as the US levies a hefty premium charge unless adequate past record of driving is presented.

Tata AIG has entered into a strategic alliance with TT Enterprises to cross-sell the product to the latter's customers.

"You do not exist unless you have a social security number, and cannot even buy lunch as you'd have no credit card for want of credit history," said Nicholas C Walsh, president & CEO American International Underwriters, AIG.

The membership programme will cover the member and provide access to banking, insurance and other fnancial products in the US.