General insurers may get nod to change covers

Non-life insurance companies will soon get the freedom to change the coverage, wordings, terms and conditions of insurance policies. However, the changes that will be proposed by the insurer to individuals or companies will have to be approved by the Insurance Regulatory Development Authority (Irda).
While non-life insurers are now free to price the products, the Tariff Advisory Committee (TAC) mandates the wordings, terms and conditions for motor, fire, engineering, marine (hull) and workmen compensation policies. Till January 2007, TAC also controlled and regulated the premium rates that had to be offered by insurers.
"We are holding discussions with the General Insurance Council (a self-regulatory body of non-life insurers). Insurance companies can file with us the deviations from the TAC wordings for each line of business and we will give the approvals on a case by case basis. But the products should be comparable by customers across insurance companies," Irda chairman C S Rao said on the sidelines of a seminar.
Irda had earlier proposed to give freedom to insurers to change covers from April 1, 2008. However, it later deferred the deadline on concerns of confusion among consumers.
Last year, the General Insurance Council had prepared uniform market wordings for the industry that could be used once they were granted the freedom to change covers. "The General Insurance Council has rephrased the existing terms and conditions. It has thrown a number of issues. We will see the changes suggested,"Rao said.
He also said that after the April figures containing the premium underwritten by non-life insurance companies are released, the insurance regulator will be able to gauge the impact of detariffing.
With 40 per cent of the corporate renewals taking place in April, any drop in premium will be reflected in the business underwritten by insurance companies. "We will get a complete picture only after the April figures are released and we will intensify our inspection of insurance companies," said Rao.
Irda is also planning to tighten the norms for granting fresh licenses to third party administrators (TPAs), who perform back-end functions for insurance companies.
"The job of a TPA is to see if the claim is supported by evidence and if genuine claims should be paid quickly. In future, we will look at the TPA's IT ability, which we had earlier ignored while giving licences," Rao said.