chapter 4_2.pptx

MARKET PRACTICE OF MOTOR INSURANCE IN INDIA 1. Insurers were given freedom to quote individual rates for the motor insurance products excluding third party liability. 2. The third party liability premium is still being regulated by the IRDAI. 3. All other terms conditions and rule...

MARKET PRACTICE OF MOTOR INSURANCE IN INDIA 1. Insurers were given freedom to quote individual rates for the motor insurance products excluding third party liability. 2. The third party liability premium is still being regulated by the IRDAI. 3. All other terms conditions and rules of the erstwhile India Motor Taiff are still in use. 4. The third party liability premium is being regulated by the IRDAI fo the reason that being a loss making portfolio on the one hand and being statutory insurance as per law on the other, freeing the pricing would have lead to spiraling of third party premium to the detriment of policyholder. CAVEATS FOR FILING ADD-ON COVERS: 1. Insurers are permitted to file variations in deductibles from those prescribed under the erstwhile Fire, Engineering, IAR and Motor OD Tariffs subject to written disclosures and acceptance by the insured prior to finalisation of the insurance policy. 2. Insurers are permitted to files add-on covers over and above the erstwhile tariff covers in Fire, engineering, IAR and Motor OD with appropriate additional premiums. 'Loss of use' and 'Waiver of Depreciation' under motor OD insurance is some example. 3. Revised products, subject to approvals under file and use guidelines may be offered to the current policy holders on renewal. 4. In the development process of motor insurance products and prices, the insurance regulator has laid down file and use guidelines as given : i. design of products should be on sound and prudent norms in atransparent manner and provide value to the customer. ii. simple language should be used in all literature of the product. iii. the product should bea genuine insurable risk product with a real risk transfer element. iv. it should comply with the rights of IRDA regulation 2002. v. similar wordings for similar products or requirements across various products to be maintained eg; renewal terms, cancellation, and arbitration clauses must be alike across all products. vi. pricing should be based on appropriate data and sound technical justifications. vii. terms and conditions should be fair. viii. margins built into rates should be consistent with insurers' experience. ix. unprincipled rate cutting and inappropriate underwriting to combat competion should be avoided.