New Delhi, Oct. 7: The tariff advisory committee (TAC) for the insurance sector is likely to discuss the revision of fire and engineering tariffs at a meeting to be held later this month.
According to TAC officials, the basic change being considered in fire and engineering tariffs “is whether there could be a possibility of re-introducing a special rating scheme for insuring larger risks”. This implies that a cover taken by a firm or an individual on a large insurance with a “good track record” would be eligible to a discount on premia. This could be as much as 25-30 per cent.
After simplification of tariff structure in fiscal 2000-01, rates for virtually all classes of industry were reduced by an average of 25 per cent across the border. At around this time the system of special rating, which had existed before, was stopped. The current move will thus attempt to reintroduce it.
“Various sectors have been lobbying for reduction in premium rate structure as an industry-specific demand. But the rationale of reintroducing special rating scheme is yet to be worked out,” said K. K. Srinivasan, secretary, TAC.
Some industry insiders say the market regulator, Insurance Regulatory Development Authority (IRDA), while attempting to revise the fire and engineering tariffs, has not yet sought a consensus on this. Hence, the meeting to discuss the issue is long-awaited.
Another issue likely to be discussed is the progress on implementation of the S. V. Mony committee report on restructuring the tariff of motor insurance on “own damages” or damages for which the insured is responsible and not a third party. This has to be implemented by April 1, 2005.
Srinivasan said, “A guiding philosophy of this meeting would be to let people know that since we are traversing from a tariff to a non-tariff market regime, we should not try to complicate the existing tariff structures any further.”
This is the first TAC meeting after C. S. Rao took over as chairman of IRDA.