**Executive Summary**
This document, issued by the Insurance Regulatory and Development Authority of India (IRDAI) on December 7, 2022, orders the constitution of a Working Group. The group is tasked with suggesting a regulatory framework following the de-notification of existing tariffs. The Working Group must submit its report within three weeks from the date of the order.
**Key Points / Main Content**
* **Background:**
* Tariffs for Fire, Engineering, Motor, Workmen's Compensation and other classes of business were withdrawn effective January 1, 2007.
* Tariff general regulations (excluding rating) continue to be followed. Premium rates can be varied subject to compliance with "File and Use" guidelines.
* The tariff for specific risks within Fire and Allied Perils was de-notified with effect from April 1, 2021.
* **Working Group Constitution:**
* A Working Group is formed to establish an effective regulatory framework post tariff de-notification for Fire, Engineering, and Motor (Own Damage).
* The group consists of members from various insurance companies and IRDAI.
* **Terms of Reference for the Working Group:**
* Suggest ways forward following discontinuation of tariffs in Fire, Engineering, and Motor(OD) lines of business.
* Suggest requisite regulatory framework for insurers to deploy of optional product structures in Property and Engineering lines of business.
* Examine the relevance of continuing the existing standard products in the fire line of business.
* Suggest a suitable business model for freedom of / increased choice in Motor Insurance products and review the case for discontinuance of MISP.
* Examine the scope for new Commercial Lines products for small, medium, and large risks.
* Recommend the draft regulatory framework keeping in mind the protection of policyholders' interests post discontinuation of tariffs.
* Consider any other relevant matter.
* **Consultation and Reporting:**
* The Working Group is advised to consult extensively with stakeholders.
* The group must submit its report within three weeks.
**Impact Analysis**
**Insurance Companies**
* **Impact:** The document directly impacts insurance companies as it outlines the formation of a working group that will provide regulatory framework suggestions for products they offer.
* **Action Required:** Insurance companies should prepare to potentially implement the new regulatory framework and provide feedback during the Working Group's consultation process. Relevant team members from these companies are to take part in the working group.
**Policyholders**
* **Impact:** The regulatory framework aims to protect policyholders' interests post the de-notification of tariffs.
* **Action Required:** Policyholders may experience changes in product offerings and pricing structures based on the new regulatory framework. No direct action is required, but policyholders should stay informed about developments.
**IRDAI (Insurance Regulatory and Development Authority of India)**
* **Impact:** IRDAI is responsible for overseeing the process of developing and implementing the regulatory framework.
* **Action Required:** IRDAI is responsible for the oversight of the working groups to ensure deliverables and timelines are met.
Key Entities Referenced
Working Group: Working Group constituted to suggest the regulatory framework post de-notification of existing tariffs in Fire, Engineering, and Motor (Own Damage) insurance.
Insurance Regulatory and Development Authority of India (IRDAI): The Authority responsible for regulating and developing the insurance industry in India, which issued the order for constituting the working group.
Tariff Advisory Committee: The committee that withdrew tariffs for various classes of business, prompting the need for a new regulatory framework.
All India Fire Tariff, 2001: The tariff that governed Fire and Allied Perils insurance business, which was partially de-notified.
File and Use Guidelines: The guidelines related to general insurance products that must be complied with when varying premium rates.
Ref No: IRDAI/NL/ORD/MISC/242/12/2022 Date: 7th December, 2022
ORDER
Re: Constitution of Working Group for suggesting the regulatory framework post
de-notification of the existing tariffs
A. Pursuant to the withdrawal of the tariffs to rates, terms, conditions and regulations
applicable to Fire, Engineering, Motor, Workmen’s Compensation and other
classes of business by the Tariff Advisory Committee vide its circular ref.
TAC/7/06 dated 4th December 2006 effective from 1 January 2007, the Authority,
vide notification dated 4th December, 2006 stipulated that the Tariff general
regulations (other than those relating to rating), terms, conditions, clauses,
warranties, policy and endorsement wordings applicable to the above mentioned
classes of business as well as Marine Hull insurance business shall continue to
be followed until further orders and that the rates of premium may be varied
subject to compliance with the Guidelines on ‘File and Use’ of General Insurance
Products.
B. The Authority vide Notification ref No. F. No. IRDAI/Non-Life
Insurance/5/171/2020 dated 28th December, 2020 de-notified the tariff general
regulations, terms and conditions etc in respect of the following risks within Fire
and Allied Perils insurance business governed by the erstwhile All India Fire
Tariff, 2001 with effect from 1st April, 2021:
a) Dwellings: Any Sum Insured
b) Offices, Hotels, Shops, Industrial/Manufacturing risks etc., where the total
value at risk does not exceed Rs.50 Crores across all asset classes at any
one location.
C. In order to put in place an effective Regulatory framework post de-notification of
the existing tariffs viz. Fire, Engineering and Motor (Own Damage), it is proposed
to constitute a Working Group with the following members.
i) Shri Bhargav Dasgupta, MD& CEO, ICICI Lombard General Insurance Co.
Ltd – Chairman of the Working Group.
ii) Shri Neelesh Garg, MD&CEO, TATA AIG General Insurance Co. Ltd.
iii) Ms Jasleen Kohli, CEO, Go Digit General Insurance Ltd.
iv) Shri Jitender Mehndiratta, General Manager, New India Assurance Co. Ltd
– Member
v) Ms C S Radhika, General Manager, United India Insurance Co. Ltd –
Member
vi) Ms. Arti Bhushan Mulik GM - Commercial Underwriting- Universal Sompo
Sy No: 115/1, Financial District, Nanakramguda, Gachibowli, Hyderabad 500 032
Phone: 040- 20204000vii) Ms. R Annam - Head Commercial Underwriting - Cholamandalam
viii) Shri Parag Gupta, CEO, SCOR Re
ix) Shri N Rama Swamy, General Manager, GIC Re. - Member
x) Shri Hitesh Kotak, CEO, Munich Re – Member
xi) Dr Sandeep Dadia, CEO, Aditya Birla Insurance Brokers Ltd
xii) Shri Sanjay Kedia, CEO, Marsh India Insurance Brokers (India) Ltd.
xiii) Shri D V S Ramesh, CGM (Non-Life), IRDAI
xiv) Shri Pradeep Kumar Singh, Manager, IRDAI
xv) Shri Hiten Kothari, Appointed Actuary, HDFC ERGO General Ins Co Ltd,
Member - Convener
D. The Terms of Reference of the Working Group are as under:
a. To suggest ways forward following discontinuation of tariffs in Fire,
Engineering and Motor(OD) lines of business.
b. To suggest requisite Regulatory framework for Insurers to deploy of optional
product structures (such as First Loss, Excess of Loss, Agreed Value) in
Property and Engineering lines of business as also to permit short-term and
long-term policies for all commercial lines of business;
c. To examine the relevance of continuing the existing standard products in fire
line of business viz Standard Fire & Allied Perils form, Bharat Griha Raksha,
Bharat Laghu Udyam Suraksha and Bharat Sookshma Udyam Suraksha.
d. To suggest a suitable business model for freedom of / increased choice in
Motor Insurance products especially with regard to purchase of new motor
vehicles and to review the case for discontinuance of MISP.
e. To examine the scope for new Commercial Lines products for small, medium
and large risks.
f. To recommend the draft Regulatory framework keeping in mind the protection
of policyholders’ interest post discontinuation of tariffs;
g. Any other matter which the Working Group feels relevant.
The Working group is advised to undertake extensive consultations with the stakeholders
during the course deliberations and before finalising the recommendations. The Working
Group shall submit its report in three weeks’ time from the date of this order.
-Sd/-
(D S Murthy)
General Manager(NL)
Sy No: 115/1, Financial District, Nanakramguda, Gachibowli, Hyderabad 500 032
Phone: 040- 20204000