Irda set to reconsider detariffing issue soon

To draft norms for stand-alone health insurance firms

The Insurance Regulatory Development Authority (Irda) will be reconsidering the issue of detariffing because of concerns raised by the industry.

It will also be coming out with the working group committee recommendations on health insurance, besides drafting the regulatory framework for stand-alone health insurance companies.

"Detariffing is a major area of concern. It was earlier decided that motor insurance would be partially detariffed from April 2005. However, the industry has been recommending that there should be either total detariffing or no detariffing at all. We would be meeting the industry representatives soon to look into their recommendations," C S Rao, chairman of Irda, said on the sidelines of the 'National Conclave of Insurance' organised by The Institute of Chartered Accountants of India (ICAI) on Saturday.

K Nitya Kalyani, editor of Irda Journal, said that because motor insurance is statutory, widespread and fragmented, constant revision of data is required.

A data warehouse is being proposed whereby the entire data on vehicles, financiers and driving licences can be gathered, processed and given to the stakeholders for further use, she added. Motor insurance contributes to about 35 per cent of the total insurance premium.

Rao also said that within a month, recommendations regarding the capital structure and solvency margins of health insurance companies would be out.

"Health insurance sector has been a major disappointment. Stand-alone health insurance companies are required for a breakthrough in this sector," he added.

Health insurance business involves providing sickness, medical, surgical or hospital expense benefits and either general insurance or life insurance companies can transact health insurance as a part of their business.

Many life insurers offer health insurance as riders instead of stand-alone products due to which there has not been enough penetration of health insurance. Health insurance contributes to only about seven per cent of the total premium income.