United India ordered to recall plan for industrial units

The Insurance Regulatory Development Authority (Irda) has directed public sector general insurance major United India Insurance to withdraw its comprehensive insurance policy for industrial units.

Irda has directed the firm to withdraw the policy and discontinue its marketing due to non-conformity to the stipulated tariff structure.

This was for the first time that a non-life insurance policy was initially passed by Irda and then cancelled due to non-conformity of rates and non-adherence to directions issued by the regulator.

Called Uni Industry Care Insurance Policy, the plan covers fire, flood, and other hazards under a single policy. The company started marketing and selling the policy a few weeks back.

The policy scored over its competitors over premium pricing as it charged less than what the Tariff Advisory Committee (TAC) had prescribed for such policies.

C S Rao, chairman Irda, said, "We had cleared the Uni Industry Care Insurance policy with some modifications. The modifications involved the company requiring to adjust its rate of premium for different category of policies it was providing to its customers."

'We had asked them to bring the premium at par with the TAC tariff and then market the policy. But we later found that the company was charging the same low rates," he added.

"United India Insurance had filed for the new cover with rates that were not in conformity to tariffs proposed by the TAC. The rates provided under the scheme were less than what the guidelines had stipulated wherever the tariff was applicable. We had asked them to change the rates and then market the policy which they did not follow. This prompted us to direct them to withdraw the policy," Rao said.

"However, policies already sold off remain in force," Rao said. "This is for the first time that we have canceled any policy that was in force," he added.

Analysts said with competition in the non-life insurance market hotting up, there was an urge among insurers to bring down premium rates which would allow them to compete favourably.

But with the controlled tariff regime still on, most of them found it difficult to provide better rates than their competitors.