third-party insurance policies are not encouraged and
more often passed to the competitor. And last but not
least, the insurance companies have decided not to accept
renewals of the motor policies issued by a different company.
Curiously, the hard approach for the motor insurance sector
by companies comes despite the freedom given to the general
insurance companies to hike the motor insurance premiums
as high as 218 per cent from last month.
Kerala, where road accidents are six times the national
average, is eligible for maximum hike in premiums. Here,
too, anomaly exists as there are no hard-and-fast rules,
which means the premiums can be fixed lower if the insurance
company desires so.
hike is hardly sufficient as the motor insurance sector
brings a loss to the tune of over 350 per cent for the
insurance companies," says Kerala State General Insurance
Employees Union president K G Prabhakaran.
Industry officials say prior to the opening up of the
insurance sector, the public sector general insurance
companies were making up for the loss in the motor insurance
sector by the lucrative fire insurance portfolio.
"The new entrants
have almost taken away the highly-profitable fire insurance
segment, whereas the loss-making motor insurance segment,
including the third party insurance segment, was left
for the public sector insurance companies to handle,"
says United India Insurance Officers Association general
secretary V R Ramachandran.
Also, the tariff advisory committee (TAC) had lowered
the fire insurance premium by 40 per cent, even while
hiking the premiums on the motor insurance sector. "Earlier,
we were making up for the losses in the motor segment
by the profits from the fire sector. But, not any longer,"
Sources say TAC has yielded to the pressure by the powerful
truck lobby while revising the tariffs recently. The premiums
on trucks were only marginally hiked by 10-14 per cent,
even while the tariffs on small segments, such as autorickshaws
and passenger cars, were increased by over 60 per cent.
The arbitrary hike in premiums has not been taken lightly
by the affected parties.
Oriental Insurance Companys Kondungalloor office was
forced to shut down for a day last month after motor insurance
vehicles association representatives threatened to damage
the office due to the arbitrary hike in premiums.
another incident that took place at a branch office of
New India Assurance in Ernakulam, a policyholder threatened
to harm its officers when he was told to pay a highly-increased
premium last month. "Discontent is brewing among
the clients. We are aware of similar instances in other
offices in the state as well," says Prabhakaran.