IRDA plans to free up motor third-party rates

 

 

MUMBAI: The insurance regulator has drawn plans to free up pricing of motor third-party (TP) cover from 2015 even as insurance companies have raised objections to the proposed new rates set to come into force from April 2014. Detariffing of the third-party cover will enable insurance companies to fix rates according to each company's experience of profitability.

Motor third-party insurance is the only cover where rates are specified by the regulator under a tariff. In all other businesses, including motor own damage (cover against damage to vehicle), pricing is decided by companies.

Responding to IRDA's proposal to free up third-party tariff, R Chandrasekaran, secretary general, General Insurance Council, said, "The industry feels that for detariffing to work, there should be changes in the law to reintroduce laws of limitation and jurisdiction on MACT (Motor Accident Claims Tribunal) claims and there should also be a cap in respect of the statutory liability. Only then will insurance companies be in a position to offer competitive pricing for TP premium within reasonable range, based on claim experience."

Separately, the Insurance Regulatory and Development Authority (IRDA) had sought views on a new draft tariff under which third-party rates for small cars will more than double but most commercial vehicles will see a drop in rates.

 

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