From January 2007, majority of the general insurance business is detariffed. Though full detariffing will come into operation from April 2008, the premiums charged by different companies have come down by 15 to 20% in most of the sectors. Consumers have been the ultimate winners of the post-detariffication exercise.

The year 2007 will be remembered in future as an important year with regard to the highly growing insurance industry for, the majority of the general insurance business got detariffed from January 1, 2007. Indian economy was liberalized in the beginning of the last decade of the last century. Regulated pricing in the liberalized market is a paradox of the Indian economy but the trend is changing. `Tariff' essentially means fixed coverage and pricing of a product. Everyone will agree that in a liberalized scenario, tariffs have no place.

As per the Insurance Regulatory Development Authority's (IRDA's) clarification, the premium rates can only be changed but the insurance product cannot be changed for the first 15 months (from January 1, 2007 to March 31, 2008). This means that insurance companies will not be allowed to change the coverage, terms and conditions, etc., of the risk cover but can either increase or decrease the premium prescribed for various customer segments. They can introduce new products only from April 1, 2008. Therefore, full detariffing will come into vogue from April 1, 2008. The tariff regulation makes it easy for the customers to decide the policy without any hassle as they need not go into details of the policy, i.e., what is covered/not covered and also don't need to check its price difference with three or four different companies.

This is an important aspect in a country like India where insurance awareness is not too high, professional intermediaries are just settling down and the customers are used to stable prices. From the regulators' perspective, tariff ensures that some minimum rate/s is/are charged and that the insurance companies' solvency is not under undue pressure. On the other hand, a tariffed environment has other consequences like—discouraging product innovation, overpricing and underpricing of some products, cross-subsidizing of customer segments, not rewarding customers with good risk management record, etc.B The loss was mainly due to the huge claims pertaining to motor policies. Of the total premium collected by the general insurance industry, almost half comes from the motor policies. The claims out of Own Damage (OD) premium is around 70-80%, but still a profit-making proposition

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