Your car/truck insurance bills are set to go up. This could happen as insurance companies may hike premiums by as much as 70 per cent to compensate for losses incurred on third party motor liabilities.
The insurance industry regulator is also contemplating increasing the buffer that companies need to provide for this portfolio.
Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority, said that the provisioning requirement for the third-party commercial motor portfolio of general insurance companies could go up from 153 per cent to between 175 and 200 per cent, as prescribed by an independent UK actuary report. He was speaking on the sidelines of the 14{+t}{+h} CII insurance summit.
BLEEDING PORTFOLIO
The third party motor insurance is a bleeding portfolio for general insurance companies. Last year, the industry took a hit of Rs 10,250-crore on account of commercial third party motor pool losses. The rise in provisioning may result in additional losses in third party motor pool for non-life insurers.
“We expect premiums to go up by 60-70 per cent for third party motor insurance,” said Mr G. Srinivasan, CMD, United India Insurance.
Mr Ashvin Parekh, Partner and National Leader, Global Financial Services, E&Y, said that the commercial vehicles' lobby had been sounded out on the proposed increase in motor third party insurance premiums.
“The IPO norms for non-life companies will come out very shortly. There are certain technical aspects that need to be cleared with the SCODA committee of SEBI,” he added.
Mr Narayan acknowledged that the time between designing an insurance product and approval from the regulator needs to be reduced. It is working on defining certain features for insurance products which will make the approval procedure for insurer's less tedious.
SIMPLER PRODUCTS
“I was wondering whether we can have a system of dos and don'ts for different types of products that might make the regulatory process smoother or more transparent,” Mr Narayan added.