The Financial Express, 10 October, 2005
The abolition of tariffs from the general insurance market would lead to the Indian market achieving global standards in underwriting and risk management besides encouraging innovation. The insured would have options to obtain international contract wordings and tailor made risk solutions.
The rationale for liberalisation of the insurance sector was to provide customers a choice. This cannot be achieved unless there is also a choice in prices and products and not just in companies.
For a competitive market, where a company wants to offer choice, there should be a free market where pricing is done on the basis of risk assessment and claims experience.
Cross-subsidisation of risks will be reduced and customers will have the opportunity to choose from a wider, better and more customised range of products and services.
We also welcome this move towards a free market regime in view of the pressure on existing non tariff lines of business such as marine, health, liability and casualty lines on the perceived notion that the existing tariffs rating levels are much higher than the international rating level. This has led to distortions in the pricing mechanisms of risks.
The author is MD, Royal Sundaram