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Insurance firms' challenges in tariff-free regime

K. T. Jagannathan

CHENNAI: With the industry set to enter the `de-tariff phase,' non-life insurance companies may have to look at underwriting a lot more seriously.

In an interaction with this correspondent, Michael Carlin, Chief Operation Officer (COO) of Tata AIG General Insurance Company, said the de-tariffed regime posed a bigger challenge in the sphere of underwriting. "Discipline in underwriting will be very critical in the de-tariffed regime," he said. he regulator, he said, had ordered that insurance firms should not alter the terms and conditions of any product for 15 months from January 1, when tariff-free regime would come into place. This could place an insurance company in a situation where premium rates could drop even as expenses remained unchanged. "Understanding and managing the risk is going to be the key to maintaining profitability," he pointed out.

Uttara Vaid, National Head (Corporate Accounts Practice), felt that there could be a 20-25 per cent drop in premium rates. She, however, hastened to add that these depended on a host of factors. Giving motor insurance as an example, she said the premium rate could go up or down depending on the damage.

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