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IRDA panel moots new council with tariffing power

K. T. Jagannathan

TAC can be converted into a technical advisory body

CHENNAI: The K. P. Narasimhan Committee, appointed by the Insurance Regulatory and Development Authority (IRDA), has suggested that the Tariff Advisory Committee (TAC) be rid of the responsibility of determining the rates, terms and advantages of insurance. It has instead favoured vesting this role on a General Insurance Council (GIC) that could be established through an amendment to the existing Act.

In its report to the IRDA, the Narasimhan panel said TAC could be brought under the auspices of the GIC after renaming it as `Technical Advisory Committee.' In its new avatar, TAC could function as a `statistical warehouse' or `analytical institution' and support the GIC in the determination of rates, terms and advantages of general insurance products.

The committee felt that the Act could be amended to merely establish a "Life Insurance Council, a General Insurance Council and the TAC." IRDA could be empowered to come out with suitable rules to regulate them, the report said.

"Ultimately, rate-making should be left to the insurers. This has to be done progressively. As a first step, the function may be transferred to the General Insurance Council as a self-regulatory organisation within the framework of regulations to be framed by the IRDA, subject, of course, to the `file and use' mechanism,'' the committee said.

The panel, nevertheless, underscored the need to bring in sufficient safeguards in any new provisions for protecting the terms and conditions of employees of the TAC. As the idea was to convert the Council into a self-regulatory organisation, the power of nomination of officials conferred on the IRDA should be done away with, it said. Once the rating functions were shifted to the GIC, any failure on the part of insurers could be dealt with seriously by bringing in deterrent provisions, the committee felt.

The committee's recommendations came even as it endorsed the IRDA roadmap for de-tariffing the `own damage' portion of motor insurance and also the S.V. Mony Group's views vis-à-vis the role of the General Insurance Council.

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