Nandini Goswami

Kolkata: The debate on dismantling the Indian Motor Insurance Pool has invited the displeasure of the Insurance Regulatory & Development Authority (Irda), which has categorically stated that it would “not entertain at any stage the removal of the pool”.

In a strongly worded letter shot off to general insurers, a copy of which is with DNA Money, Irda chairman C S Rao said, “I understand that the issue of motor pool for commercial vehicles has been under discussion in the General Insurance Council and a few insurers seem to have expressed the view that the pool should be wound up and insurers should be given freedom to issue policies without reference to the pool. I would like to categorically state that the Authority would not entertain at this stage any suggestion for removal of the pool”.

“It was the unanimous view of the general insurers that as a part of the process of detariffication, a motor pool should be established and through effective management, we should demonstrate that the runaway costs with regard to the settlement of claims could be effectively tackled. I am disappointed to find that little effort is made so far in this direction and instead issues once settled are sought to be reopened”, the letter continued.

The motor pool was formed to take over the third party motor insurance risks of commercial vehicles. This would solve the problem of companies denying cover to customers on grounds of high claim ratios.

Nine months into the pool’s operation, the pool cracked along the public sector-and private sector-lines. Most private general insurers feel the motor pool has outlived its purpose and want an urgent review. Some feel the pool would be a strain on their respective balance sheets.

The public sector insurers, however, want the pool to stay as say they would not be able to write all types of commercial vehicle third party policies without the pool arrangement.

“I am plainly surprised at this kind of debate as Motor Pool was always treated as an integral part of the whole process of removal of tariffs and highest priority accorded to finding a solution for third party covers, especially for commercial vehicles”, Rao said.

Rao’s letter has left insurers in a quandary and no company was willing to go on quote on the contentious issue.

“I would request all of you to come together to find out how best commercial third party motor portfolio can be effectively managed”, is how the Irda chairman concluded his letter.

Source : DNA