Irda norms to reduce motor insurance losses

Insurance sector regulator IRDA’s decision to implement ‘declined risk pool system’ for third party motor insurance is likely to reduce the losses incurred in this space, officials of various general insurance companies said.

“With declined risk pool system, companies would be better placed to manage the risks of their motor policy accounts. So, the loss incurred in the commercial vehicle third party space should come down,” ICICI Lombard Chief Financial Officer Gopal Balachandran said.

Declined motor pool is the arrangement in which insurers would have the right to refuse or decline a vehicle insurance and these vehicles will be insured from the pool shared by insurers.

According to the regulator, the insurance companies would now need to retain 20 percent of the gross premium in their accounts, give 10 percent to General Insurance Corporation of India and rest 70 per cent would go to the motor pool.