## Report on Denotification of All India Fire Tariff (AIFT), 2001 for Certain Risks
**1. Executive Summary:**
This report analyzes a notification issued by the Insurance Regulatory and Development Authority of India (IRDAI) regarding the denotification of the All India Fire Tariff (AIFT), 2001 for specific categories of fire and allied perils insurance risks. The core purpose of this amendment is to remove tariff regulations for dwellings (any sum insured) and certain commercial/industrial risks where the total value at risk does not exceed Rs. 50 Crores, allowing for market-determined pricing subject to regulatory guidelines. Key findings indicate a move towards deregulation for specified segments of the fire insurance market, effective April 1, 2021.
**2. Introduction:**
This report aims to provide a comprehensive overview of the IRDAI notification F. No. IRDAINonLife Insurance51712020, dated December 28, 2020, pertaining to the denotification of the All India Fire Tariff (AIFT), 2001 for certain risks. The analysis is based solely on the provided policy text.
**3. Policy Overview:**
* This notification amends the existing framework governed by the Insurance Act, 1938 and the IRDA Act, 1999, specifically impacting the application of the All India Fire Tariff (AIFT), 2001.
* **Core Objective:** The core objective, inferred from the text, is to deregulate the pricing and terms of fire and allied perils insurance for specific risk categories, enabling insurers to offer customized products subject to regulatory oversight.
**4. Background and Rationale:**
The text indicates that the Tariff Advisory Committee (TAC) had previously withdrawn tariffs, and IRDAI had issued notifications in 2006 allowing for varied premium rates subject to regulatory compliance. This amendment builds on that trend, moving towards further deregulation for specific segments. The likely reason for this specific amendment is to introduce greater market flexibility and competition in the fire insurance sector for risks considered to be within a certain threshold (Rs. 50 Crores).
**5. Key Provisions / Changes:**
This notification introduces the following specific changes:
* **Part of Original Policy Changed:** This amendment specifically modifies the applicability of the All India Fire Tariff (AIFT), 2001.
* **New Rule/Provision:** Effective April 1, 2021, the tariff general regulations, terms, conditions, clauses, warranties, policy, addons, endorsement wordings, and proposal form applicable to the following risks are denotified:
* Dwellings: Any Sum Insured
* Offices, Hotels, Shops, Industrial/Manufacturing risks, Utilities located outside the compound of industrial/manufacturing risks, Storage risks outside the compound of industrial/manufacturing risks, and Tank farms/Gas holders outside the compounds of industrial/manufacturing risks where the total value at risk does not exceed Rs. 50 Crores across all asset classes at any one location.
* **Difference/Effect of Change:** This change removes the previously mandated tariff structure for the specified risks. Insurers are now permitted to determine premium rates and policy terms based on their own risk assessment and pricing models, subject to regulatory guidelines and product filing requirements stipulated by IRDAI. All other risks shall continue to be governed by the erstwhile All India Fire Tariff AIFT, 2001 until further notification.
**6. Target Audience and Stakeholders:**
The directly affected stakeholders are:
* **Insurance Companies:** They are granted greater flexibility in pricing and structuring fire insurance products for the denotified risk categories.
* **Property Owners (Dwellings, Offices, Hotels, Shops, Industrial/Manufacturing Facilities):** Owners of properties falling within the denotified categories (particularly those with sum insured not exceeding Rs. 50 Crores for commercial/industrial risks) will likely see changes in the pricing and terms of their fire insurance policies. This includes both large and small scale industries.
* **Insurance Brokers and Agents:** They will need to adapt their advice and product offerings to reflect the new, deregulated environment.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency:** The Insurance Regulatory and Development Authority of India (IRDAI) is the responsible agency for overseeing the implementation of this notification.
* **Timelines:** The denotification is effective from April 1, 2021.
* The text mentions that Fire and Allied perils covers for the risks mentioned in 4a and 4 b above shall be subject to the Regulations and/or Guidelines enunciated in this regard by the Authority and amended from time to time.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of these changes are:
* **Increased Competition:** Deregulation is expected to foster greater competition among insurance providers, potentially leading to more innovative product offerings and competitive pricing for the denotified risk categories.
* **Customized Risk Pricing:** Insurers can now tailor premiums based on their own risk assessments, potentially leading to more accurate and fair pricing.
* **Enhanced Product Innovation:** The flexibility afforded by deregulation may incentivize insurers to develop more specialized and tailored insurance products for specific market segments.
* This may lead to further deregulation of other sectors in the insurance industry.
**9. Conclusion:**
The IRDAI notification regarding the denotification of the All India Fire Tariff (AIFT), 2001 for specific risks represents a significant step towards deregulation in the fire insurance market. By removing tariff restrictions for dwellings and certain commercial/industrial risks below a specified value threshold, the amendment aims to foster competition, encourage customized risk pricing, and promote product innovation. The impact of these changes will be closely watched by insurance companies, property owners, and other stakeholders in the fire insurance sector. The date of effect is April 1, 2021.
Key Entities Referenced
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA: Regulatory body issuing the notification.
Hyderabad, Telangana: Location where the notification was issued.
Insurance Act, 1938: The primary legislation providing the powers for the notification.
Tariff Advisory Committee: The organization that previously set tariffs, whose withdrawal led to this notification.
IRDA Act, 1999: Act that provides the Insurance Regulatory and Development Authority of India certain powers
All India Fire Tariff AIFT, 2001: The tariff being denotified for certain risks.
Fire and Allied Perils insurance: Type of insurance business impacted by the notification.
Dr. SUBHASH C. KHUNTIA: Chairman of the Insurance Regulatory and Development Authority of India.
Ring Road, Mayapuri, New Delhi: Location of Government of India Press
Delhi: Location of Controller of Publications
1st April, 2021: Effective date of the denotification.
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
xxxGIDHxxx
सी.जी.-ए.पxी.x-xअG.I-D0E1x0xx1 2021-224077
CG-AP-E-01012021-224077
ऄसाधारण
EXTRAORDINARY
भाग III—खण् ड 4
PART III—Section 4
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 569] नइ ददल्ली, बुधिार, ददसम्ब र 30, 2020/ पौर् 9, 1942
No. 569] NEW DELHI, WEDNESDAY, DECEMBER 30, 2020/PAUSHA 9, 1942
भारतीय बीमा जिजनयामक और जिकास प्राजधकरण
ऄजधसचू ना
हदै राबाद, 28 ददसम् बर 2020
फा. स.ं अइअरडीएअइ/गरै जीिन बीमा /5/171/2020.—बीमा ऄजधजनयम, 1938 की धारा 64 यूएलए की
ईप-धारा (1) द्वारा प्रदत्त िजियों का प्रयोग करत े हुए, प्राजधकरण आसके द्वारा जनम्नजलजखत ऄजधसूचना, ऄथाात् – “ऄजखल
भारतीय ऄजि प्रिल्ु क (एअइएफटी), 2001 की कुछ जोजखमों के जलए ऄजधसूचना का जनरस्ट्तीकरण” बनाता ह।ै “
1. यह ऄजधसूचना बीमा ऄजधजनयम, 1938 की धारा 64 यूएलए (1) सी के ऄधीन जारी की जाती ह ै जो ईपयुाि
ऄजधजनयम की धारा 64 यूसी के ऄधीन प्रिल्ु क सलाहकार सजमजत द्वारा जनधााररत दरों, लाभों और ितों स े
संबंजधत ऄजधसूचना को जनरस्ट्त करन े की व्यिस्ट्था करता ह,ै जजनके बारे में यह माना गया दक िे ऄजधसूचना का
ऐसा जनरस्ट्तीकरण होन े तक लगातार प्रचजलत होंगे।
2. िर्ा 2006 में, प्रिुल्क सलाहकार सजमजत के द्वारा प्रिुल्कों के प्रत्याहरण के ऄनुसरण में, भारतीय बीमा
जिजनयामक और जिकास प्राजधकरण (“प्राजधकरण”) ने अइअरडीए ऄजधजनयम, 1999 की धारा 14(2)(i) के
ऄंतगता ऄपन े म ें जनजहत िजियों का प्रयोग करत े हुए ऄजधसूचना संदभा 034/अइअरडीए/डी-टैररफ़/ददसं.-06
ददनांक 4 ददसंबर 2006 जारी की दक प्रिुल्क संबंधी सामान्य जिजनयम (रेटटग से संबजधत को छोड़कर ऄन्य),
व्यिसाय के कुछ िगों, जैसे ऄजि (फायर), आंजीजनयटरग, मोटर, कामगार प्रजतकर तथा बीमाओं के ऄन्य िगों के
जलए लागू ितों, जनबधं नों, खडं ों, िारंरटयों, पाजलसी और ऐड-अन पष्ृ ांकन िाक्यरचना और प्रस्ट्ताि फामा जो ईस
समय प्रिुल्कों के ऄंतगता जिद्यमान थ,े का ऄनुसरण करना ऄगल े अदेिों के जनगात होन े तक जारी रहगे ा।
3. प्रीजमयम की दरों के जलए साधारण बीमा ईत्पादों की फाआललग करने पर ितामान जिजनयामक ढााँचे के ऄनुपालन
के ऄधीन पररिती होने की ऄनमु जत दी गइ थी।
6426 GI/2020 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
4. ऄब बीमा ऄजधजनयम की धारा 64 यूएलए (1) के ऄंतगात प्राजधकरण म ें जनजहत िजियों के अधार पर आसके द्वारा
यह ऄजधसूजचत दकया जाता ह ै दक नीचे ददये गय े जििरण के ऄनुसार धाराओं I, II, III, IV, V, VI और VII तथा
संबजं धत ऄनबु धं ों के ऄतं गता पिू ा के ऄजखल भारतीय ऄजि प्रिुल्क 2001 द्वारा जनयंजित ऄजि (फायर) और संबद्ध
संकटों से संबंजधत बीमा व्यिसाय के जनम्नजलजखत जोजखमों के जलए लाग ू प्रिल्ु क संबंधी सामान्य जिजनयम, ित,ें
जनबंधन, खंड, िारंरटयााँ, पाजलसी, ऐड-अन पष्ृ ांकन िाक्यरचना और प्रस्ट्ताि फाम ा जिर्यक ऄजधसूचना 1 ऄप्रलै
2021 स े जनरस्ट्तीकृत रहगे ी।
(क) जनिासः कोइ भी बीजमत राजि
(ख) कायाालय, होटल, दकु ान, औद्योजगक/ जिजनमााण जोजखम, औद्योजगक/जिजनमााण जोजखमों के दायरे स े बाहर
जस्ट्थत ईपयोगी िस्ट्तुए,ाँ औद्योजगक/जिजनमााण जोजखमों के दायरे स े बाहर भंडारण जोजखम तथा टैंक फाम/ा
औद्योजगक/जिजनमााण जोजखमों के दायरों के बाहर गैस होल्डर जहााँ दकसी एक स्ट्थान पर जिद्यमान जोजखम
पर कुल मल्ू य सभी अजस्ट्त िगों को सजम्मजलत करत े हुए रु. 50 करोड़ से ऄजधक नहीं हो।
5. तदनुसार, आसके द्वारा यह ऄजधसूजचत दकया जाता ह ै दक 1 ऄप्रलै 2021 स,े उपर 4(क) और 4(ख) म ें ईजल्लजखत
जोजखमों के जलए ऄजि और सबं द्ध जोजखम बीमारक्षा किर प्राजधकरण द्वारा आस संबंध में जारी दकये गये तथा
समय-समय पर संिोजधत जिजनयमों और/या ददिाजनदेिों के ऄधीन होंगे।
6. सभी ऄन्य जोजखमों का, पूिा के ऄजखल भारतीय ऄजि प्रिुल्क (एअइएफटी), 2001 द्वारा जनयंजित होना ऄगली
ऄजधसूचना तक जारी रहगे ा।
डॉ. सुभार् सी. खुंरटअ, ऄध्यक्ष
[जिज्ञापन III/4/ऄसा./429/2020]
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad, the 28th December, 2020
F. No. IRDAI/Non-Life Insurance/5/171/2020.—In exercise of the powers conferred by sub section (1) of
section 64 ULA of the Insurance Act, 1938, the Authority hereby makes the following notification, namely:-
“De-notification of All India Fire Tariff (AIFT),2001 for certain risks.”
1. This notification issued in terms of Section 64 ULA (1) of the Insurance Act, 1938 provides for de-notification of
the rates, advantages and terms and conditions laid down by the Tariff Advisory Committee under Section 64 UC
of the said Act which were deemed to continue to be in force until such de-notification.
2. In the year 2006, pursuant to the withdrawal of tariffs by the Tariff Advisory Committee, the Insurance Regulatory
and Development Authority of India (“Authority”) in exercise of powers vested in it under Section 14(2)(i) of the
IRDA Act, 1999, issued notification Ref.034/IRDA/De-Tariff/Dec-06 dated 4th December, 2006 that the Tariff
general regulations ( other than those relating to rating), terms, conditions, clauses, warranties, policy and
endorsement wordings applicable to certain classes of business such as Fire, Engineering, Motor, Workmen’s
Compensation and other classes of insurances which were then under tariffs shall continue to be followed until
further orders.
3. The rates of premium were allowed to be varied subject to compliance with the extant regulatory framework on
filing of general insurance products.
4. Now, by virtue of powers vested with the Authority under Section 64 ULA (1) of the Insurance Act,1938 it is
hereby notified that the tariff general regulations, terms, conditions, clauses, warranties, policy, add-ons,
endorsement wordings and proposal form applicable to the following risks of Fire and Allied Perils insurance
business governed by the erstwhile All India Fire Tariff, 2001 under Sections I, II, III, IV, V, VI and VII, and
the relevant annexures, as per details given below stand de-notified with effect from 1st April, 2021.
(a) Dwellings: Any Sum Insured
(b) Offices, Hotels, Shops, Industrial/Manufacturing risks, Utilities located outside the compound of
industrial/manufacturing risks, Storage risks outside the compound of industrial/manufacturing risks and[भाग III—खण् ड 4] भारत का राजपि : ऄसाधारण 3
Tank farms/Gas holders outside the compounds of industrial/manufacturing risks where the total value at risk
does not exceed Rs.50 Crores across all asset classes at any one location.
5. Accordingly, it is hereby notified that with effect from 1st April, 2021, Fire and Allied perils covers for the risks
mentioned in 4(a) and 4 (b) above shall be subject to the Regulations and/or Guidelines enunciated in this regard
by the Authority and amended from time to time.
6. All other risks shall continue to be governed by the erstwhile All India Fire Tariff (AIFT), 2001 until further
notification.
Dr. SUBHASH C. KHUNTIA, Chairman
[ADVT.III/4/Exty./429/2020]
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.