Insurance firms seek easier regulations for vehicle insurance

General insurance companies have sought deregulation of tariffs for third party motor vehicle insurance premium and a cap on insurance company liabilities among others for smoothening the path for general insurance companies.

Motor vehicle insurance, which has 41 per cent share in the non-life insurance sector, faces major challenges because of regulated tariff, unlimited liability, non-jurisdiction restrictions for filing claims and underinsurance among others, CEOs attending a meeting of top officials of insurance companies told finance minister P Chidambaram today.

CEOs of public and private sector companies participating in the meeting expressed various difficulties being faced by them especially in the field of motor vehicle insurance (including third party insurance), health insurance, home, fire and group insurance among others.

As regards health insurance, the insurance companies have suggested that a proper mechanism be put in place for formulating an appropriate pricing mechanism for group health insurance, which takes into consideration the existing incurred claims ratio (ICR), management expenses, medical inflation, cost of under-writing the business and other associated problems.

Some officials raised tax related issues, including non-applicability of MAT for non-life insurance sector on a par with life insurance companies.

Suggestions were also made to further improve the penetration in home insurance sector and to resolve agents and regulator related matters.

The meeting, convened by finance minister P Chidambaram called for improving growth and penetration of non-life insurance sector. The finance minister called for increasing reach to the maximum number of people along with growth of investment in this sector.

With a very low penetration of non-life insurance sector (premium to GDP) of just 0.71 per cent in 2011, which was far below the international benchmarks, and still untapped potential, he said there was significant room for growth for non-life insurance companies.