General insurers oppose Irda’s plan to dismantle third-party motor pool

While the Insurance Regulatory and Development Authority (Irda) is toying with the idea of dismantling the controversial third-party motor pool because of huge losses, general insurers are favouring implementation of wide-ranging reforms to keep the pool operational.

“The pool was set up by the regulator with specific objective of providing third-party motor covers to everybody conveniently. We haven’t as yet reached a stage where the services of the pool can be done away with. But the pool needs improved measures including a rise in premium to be more effective. Though Irda will do away with the pool one day, it may not happen so soon,” said R Chandrasekaran, secretary-general, General Insurance Council, the umbrella body of non-life insurers.

 

It will be difficult for private sector general insurers to provide third-party motor cover without the pool as they don’t have a nationwide presence, added Chandrasekaran.

 

The third-party motor pool currently has a loss ratio of 150%. The pool, which had earned a premium of around R3,500 crore, has suffered a loss of over R7,000 crore in the first six months of the fiscal.

On the recent move by GIC Re — the sole official reinsurer of the country —to discontinue payment of commission to general insurers on obligatory business, Chandrasekaran said Irda, GIC Re and general insurers are in talks with the finance ministry on the issue. Read More here