Pvt insurers gear up for detariffing

Private insurance companies are leaving no stones unturned to compete with their public sector counterparts.

These firms have set up dedicated teams of underwriters and are tapping the expertise of their foreign partners to price the policies depending on the risk profile (to be detariffed) in the next six months.

Antony Jacob, managing director, Royal Sundaram Alliance, said that two actuaries (who develop new insurance policies after analysing the data on various risks involved) from its UK partner, Royal Sun, are helping the company in analysing the data obtained to price the insurance policies and two more are expected to be added in the next few months.

The Insurance Regulatory & Development Authority has notified general insurers to submit the pricing of policies for the motor and fire segments after analysing the data collected on various risks by middle of October-November 2006. At present, the car, motorbike, commercial vehicle and property insurances are being sold at a price fixed by the regulator.

A team of five underwriters who have completed their actuarial studies in India have undergone training from Allianz actuaries, the foreign partner of Bajaj General Insurance.

Krishnamurthy, head underwriting, Bajaj Allianz, says since the overseas partner has already an experience of a detariffed market in other countries, they can provide valuable expertise on the areas of risks while pricing a policy.

Although India is a different market and experience gathered from other countries cannot be replicated fully, at least likely areas of focus and training on underwriting plays a significant role, he adds.

An industry expert says that now underwriters of policies see the chart and write premium without analysing the risks involved and accordingly price the policies, which is expected to happen once the insurance industry is detariffed.

Krishnamurthy explains currently the price of car insurance is based on factors such as vehicle model, capacity and age of vehicle, zone used while the profile of the driver is ignored.

In a detariffed regime, details such as the age of the driver, accident history, where the car is parked among others will be analysed and suppose the driver has had no accidents, the premium charged for his car will be lesser compared with one with a history of accident.

Dalip Verma, managing director, Tata AIG, says that according to the Irda roadmap on detariffing, even after detariffing, there will be no change in the conditions of the policies the first six months.

Moreover, only after June 2007, will there be a change in pricing of policies and even then it cannot increased or decreased over 20 per cent of the current prevailing price.

"It is essential to have a team of underwriters work on pricing of policies by analysing the available data in a detariffed regime as it is essential for each product to have a proper loss record to find correct claims costs. If the price of policies is lesser than or greater than the given band of 20 per cent, it will have to be quantified by data analyses," says Amol Phadnis, national manager for underwriting, ICICI Lombard.

Iffco Tokio, promoted by Indian Farmers Fertilisers Cooperatives, Krishak Bharati Cooperative, Indian Potash and Japan-based Tokio Marine group, has about seven underwriters specifically working on the data collected by the company required for detariffing.