There are clear indications from the Insurance Regulatory circles that suggest that the Tariff Advisory Committee (TAC), the statutory insurance rate controlling body, is getting ready for detariffing the non-life insurance market in early 2007, in its entirety. For decades, non-life insurance business has been a strongly tariff-driven market, particularly in the insurance segments of fire and engineering and motor businesses that accounted for nearly 70% of the market premium of about Rs. 20,000 cr in 2005.
There are at present 13 non-life insurance providers in the market, with five in the public sector and eight in the private sector. The proposed detariffing measure is likely to affect significantly their future market behavior. But presently none, including the insurers, knows how; as no detailed studies have been conducted and no data has been analyzed.
Consumers, of course, will generally react to it favorably, except those in the motor segment, as it gives them a wider choice on all aspects of insurance buying, price being the most dominant. Statistics show that over 80% of the insurance buyers do not put in claims but buy insurance to get an assured sense of financial security or due to pressures from banks and other institutions that regard an insurance policy as a collateral.
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