PGI-Tariff Regime Tariff Advisory Committee The word Detariffing Three Phases of De-Tariffing Effect of defariffing Insurance Challenges that a Business faces

1. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Affiliated Institution of G.G.S.IP.U, Delhi
BBA(B&I)
PGI (18306)
By:
Ratika Malhotra

2. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Tariff Regime
• Tariff market is one where the premium rates, policy
terms and deductibles are controlled and to be applied
uniformly by all the underwriters.
• In India, about 70% of the market (property ,
Engineering, Motor and W.C.) were tariffed i.e. policy
wordings and minimum rates are fixed and each
company is free to quote the guide rate or higher.
• India is the only country in the World where such huge
portion i.e. about 70% of the market was under Tariff/
IRDA/TAC control where Tariffs had been done away with
in most markets around the world.

3. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Tariff Advisory Committee
• TAC was constituted in 1938 as a body
corporate that control and regulate the rate,
terms and conditions in respect of general
insurance business.
• Main purpose of TAC:
1. Correct pricing
2. Standardization
3. Storehouse of information

4. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
The word Detariffing
• Is a burning issue for a long period say, for the last four
years.
• Will bring change in industry structure.
• Bring newer avenues for growth in Indian insurance market
• Customers would definitely benefit in the long run.
• A paradigm shift in insurance business.
• Making all insurers free to decide the premium rates based
on their in-house guidelines of pricing.
• Detariffing is the opening up of the market to free pricing
and flexible policy terms and conditions.

5. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Three Phases of De-Tariffing
• 1994 -- marine cargo, personal accident, health, banker liability and
aviation
• 2005-06 -- marine hull segment
• 2007 - fire, engineering and motor own damage (OD)
The only segment that remains under a tariff regime is the third party motor
business . Main reason behind this is to that motor third party is a loss
making portfolio and being a compulsary insurance, freeing the pricing
would lead to increase in premium to an extent that it become unaffordable
for the policyholder.

6. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Effect of defariffing
• RISK- BASED UNDERWRITING
• CONTINUOUSLY MONITOR RELATIONSHIP;
• ADDRESS ALL LIMITATIONS OF TARIFF;
• FIRST LOSS/EML/PML BASED COVERS MAY COME TO EXIST;
• LONG-TERM COVERS BE INTRODUCEDTO ENSURE MUTUAL BENEFIT
POLICY WORDING TO BE SIMPLIFIED AND TO REFLECT CHANGED
ENVIRONMENT;
• MAY ADDRESS INFORMATION ASYMMETRY;
• INSURER TO THINK- HOW TO SPEED UP CLAIMS SETTLEMENT
• ENSURE LOSS ASSESSORíS RECOMMENDATIONS, WITH INSURERíS
CONCURRENCE, HAVE THE IMPACT OBSERVATIONS ON POLICY
CONDITIONS; LIKEWISE, RISK CONTROL/IMPROVEMENT REPORTS
WILL GET IMPORTANCE

7. Trends
 Multi-distribution i.e. increasing penetration through new modes of
distribution such as the internet, direct and telemarketing and NGOs
Product innovation i.e. increased levels of customization through product
innovation
Claims management i.e. timely and efficient management of claims to
prevent delays which can increase the claims cost
Profitable growth i.e. expanding product range, developing innovative
products and expanding distribution channels
Regulatory trends i.e. mandated regulatory changes by the IRDA to
promote a competitive environment in both the life and non-life insurance
sectors

8. Insurance Challenges that a Business
faces
Needing a trusted advisor
•Are you receiving valuable advice through a consultative approach?
•Is your broker proactive in addressing your insurance needs?
•Do you have a “true business partner” in your insurance broker?
Finding the proper insurance program
•Is your current insurance program competitively priced in the current
market environment?
•Has a risk management analysis been conducted recently on your
insurance exposures?
•Does your broker offer coverage options and recommendations?
Managing risk
•How competitive is your Risk Management Program?
•How are you controlling your exposure to loss sources?
•Do you have a Contractual Risk Transfer Program in place to limit
potential lawsuits?

9. Choosing a strong insurance company
•Does your insurance company have financial strength and strong
claims paying ability?
•Is your insurance company a leader in your industry?
•Does your insurance carrier provide consistent delivery of valued
services?
Delivering customized employee benefits
•Is your Employee Benefits Program cost-effective?
•Are you able to attract and retain employees with a benefits
program that is competitive within your industry?
Protecting personal assets
•Are you taking advantage of recent competitive rating reforms to
automobile insurance?
•Do you have personal property and liability limits to protect your
assets from loss?
•Do you regularly review your life insurance benefits following life
cycle events?

10. THANK YOU