Adding: “This gain needs to be passed on to the ultimate customer. I am expecting the regulator to come up with indicative premiums for five years, because if everyone starts passing on as per own experience and data, it could create another problem.”
Experts say only 45 per cent of motorcycles and scooters are insured and so are 70 per cent of cars. It is estimated that vehicular collisions cause the death of 150,000 people every year in the country.
The problem at the moment is that insurers have to rethink the structure of their products. Jain says, “We can't say whether prices will fall or increase, as TP liability depends on claims compensation awarded by motor accident tribunals.”
The authorities calculate the compensation on income levels of victims and future realisable incomes in cases of accidental death. In motor-TP insurance, prices are regulated entirely by Irdai.
The body revises prices every year; this April 1, it issued lower rates for both vehicle categories as compared to last year. “Income and cost keeps increasing. Structurally, for any long-term policy, there will be need to forecast the possible future compensation and arrive at premiums accordingly,” said Jain.
On Friday, the regulator constituted a committee to look into motor-TP pricing, headed by member (non-life) P J Joseph. The 16-member panel will have to examine insurers’ data and compute prices, based on historical rates of compensation granted to victims or for property damage.
Sahni said the regulator would sooner or later come up with guidelines (two-year for cars and five-year for two-wheelers) for comprehensive motor insurance products, not mandatory at present.
The Irdai committee has representatives from the ministries of finance and road, transport & highways. And, from the All India Motor Transport Congress, Bus Operators Confederation of India, and insurance executives. They will have to make recommendations for motor-TP pricing for 2019-20.