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`Detariffing is part of move to hike FDI in insurance'

Staff Reporter

`Large industrial units are the real beneficiaries'

KOCHI: Kerala State General Insurance Employees' Union has alleged that the insurance premium hike is the result of detariffing. Union General Secretary C.B. Venugopal said the detariffing was the outcome of the liberalisation policies pursued by the Government.

The insurance companies were able to offset the loss from the vehicle insurance through the cross subsidy from fire, marine and other insurance segments. Because of the detariffing, the premium rates in the latter segments had decreased and hence the cross subsidy was not viable. The increase in vehicle insurance premium is a direct result of this development, he said in a statement.

The large industrial units that subscribe to such insurance policies will be the real beneficiaries under the new situation, according to him. He also alleged that the situation helped the private insurance companies to raise the premium steeply in vehicle insurance and medical insurance. Mr. Venugopal said detariffing was part of the move to increase the FDI limit in insurance. The detariffing had adversely affected the public sector insurance companies and their employees, he said. He also called for strong agitation against it.

The General Insurance Officers All India Association has flayed the cut in third party premium. In a statement, the association said the four public sector insurance companies were facing a heavy accumulated loss in the motor vehicle insurance segment. If the third party premium is unscientific and unattractive, the private insurers will not give third party policies. Consequently, the public sector insurance companies would have to bear the burden, said association leader P.P. Mohanan.

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