Business
Motor TP insurance: Administered price, long term cover vs deregulated price, one year cover
The Indian general insurance industry is divided on the aspect of long term versus one year motor third party risk cover and its pricing mode.
However, they are unanimous in their view that the third party insurance should be under them and not with the central government or administered as a pool.
Vehicle insurance policies are two parts — own damage (insurance for the vehicle against damage, theft) and third party liability (liability for third parties).
The third party insurance cover is mandatory whereas the insurance cover for vehicle damage is not mandatory. The premium is fixed by Insurance Regulatory and Development Authority of India (IRDAI).
The general insurer’s role in designing the risk cover, promoting it, and fixing the premium is almost zero.
“I am for the deregulation of the third party premium rates. The premium rate is not administered one in major countries,” Varun Dua, Managing Director and CEO, Acko General Insurance Limited, told IANS.
Like him, many CEO when asked by IANS agree for deregulation of premium rates but strangely that is not happening.
Even after two decades after liberalisation of the sector citing various reasons including reduction in premium, insurers seem to want the price to be administered with yearly upward revision and not as per their claims experience.
Nearly 40 per cent of the general insurance business is from the motor insurance vertical and a major portion of that from third party risk cover, insurers are not enthusiastic about any changes resulting in lower premium and investment income.
Contrary to the claims made by the general insurers that they are incurring huge losses under the motor portfolio, the numbers as per the Insurance Information Bureau of India (IIB) study shows the contrary.
In its annual report on motor insurance for the fiscal 2018-19, the IIB said a sum of Rs.35,519 crore of motor claims – towards vehicle damage (Rs.18,262 crore) and third party liability (Rs.14,257 crore) were settled during 2018-19- while the gross underwritten premium was Rs.64,522.35 crore.
According to the report, the average settlement amount for death claims during fiscal 2018-19 was Rs. 901,207 and for injury claims it was Rs. 251,094.
The industry players also claim that a large number of vehicles run on the roads without third party insurance.
However, they do not have any answer when asked how that impacts them as they pay claims only on those policies issued by them and it is for the police to penalise the violators.
Industry players say they bring in efficiency in third party loss management when queried about insurers being freed of third party insurance in favour of the central government or administered as a pool.
“The insurer is bringing in expertise and efficiency in loss administration and fraud control. At the same time, claims administration requires a lot of manpower and infrastructure which has already been set up and improved by various insurers,” Adarsh Agarwal, Appointed Actuary, Go Digit General Insurance told.
According to him, a policyholder decides on the mode of claim for vehicle damage – whether under own damage part or getting into an arbitration for a third party claim under a third party property damage clause- separating the two may put him into difficulty.
Unless there is a process advantage that speeds up the third party claims with the judiciary involved, Agarwal added.
“One cannot wish away the role of insurers. They ensure easy access, availability of such insurance products which cannot be replicated by an already overburdened government,” R. Raghavan, former General Manager of General Insurance Corporation of India (GIC Re) and founder CEO of Insurance Information Bureau of India (IIB) told IANS.
Insurers are well equipped to handle the stretched claims process in Motor Accident Claims Tribunals and subsequent litigation, he added.
Raghavan said, though IRDAI still keeps finalising the premium rates, the insurers supply necessary data for the actuarial pricing process.
On the point of long term motor third party policy Raghavan said: “It is in the interest of the society at large, for insurance terms to be longer in duration. It also helps insurers to balance their books towards making adequate provision for such long tail liabilities. Portability may effectively undo this equity and also lead to wild goose chase in pinning the right insurer for payment. An insurer with a multi year commitment will work on price efficiency too,” Raghavan said.
Differing on that Agarwal said: “Long term policies have a twofold problem. A customer is encouraged to stick to one company despite the service quality they get from the current insurer as changing the insurer has an inherent inertia mid-way. Secondly, accounting the spare portion and labour cost for a longer term, given the inflation, is tricky and not ideal for the general insurance industry.”
“If one makes non-life insurance a long-term contract, the capital needs, provisioning norms and others would kick in. How it would impact an insurer in the future as motor third party claims are long-tailed ones is not known now,” and industry official told preferring anonymity.
Locking in a policyholder for five long years with one insurer also makes the playing field anti-competitive and anti-policyholder.
“The vehicle dealers will have an upper hand. They will demand higher compensation from the insurers. Already dealers are selling only policies of those insurers from whom they get higher commissions and other perks,” an industry official told
Business
Nifty, Sensex see firm recovery after RBI’s support to rupee

Indian equity benchmarks posted a firm recovery, sustaining gains for the second week as investors looked past early inflation worries, especially after the central bank’s special dollar window for oil marketing companies helped the rupee rebound.
Nifty added 2.78 per cent during the week and gained 0.65 per cent on the last trading day to reach 23,146.
At close, Sensex was up 413 points or 0.56 per cent at 74,729. It gained 3.11 per cent during the week.
Market sentiment was dented earlier in the week by consumer inflation hovering near the upper end of the Reserve Bank of India’s tolerance band and a hotter‑than‑expected wholesale price index print that pushed benchmark bond yields to multi‑year highs.
The central bank raised the daily cash reserve ratio maintenance requirement to absorb surplus liquidity, adding to caution. Market confidence, however, improved after the central bank’s special dollar window for oil marketing companies and tighter hedging norms drove a rupee-rebound, analysts said.
“Expectations of a review of LTCG tax and STT, softer crude prices and easing bond yields further revived risk appetite, prompting investors to tilt towards counters with strong Q2FY27 business updates, though the rally remained concentrated in large-caps, with mid-caps posting modest gains and small-caps ending marginally lower,” they added.
“Participants should remain selective, maintain disciplined position sizing and favour a hedged approach amid elevated macroeconomic and earnings-related uncertainty,” the experts said.
Information technology (IT) sector emerged as the standout performer on robust earnings and upbeat management commentary, while healthcare and pharmaceuticals lagged as investors favoured sectors with stronger near-term earnings visibility.
Meanwhile, fast‑moving consumer goods stocks came under pressure amid concerns over margin compression from elevated input costs.
Broad market indices performed largely in line with the benchmark indices as Nifty Midcap100 added 0.58 per cent and Nifty Smallcap100 dipped 0.12 per cent during the week.
In addition, foreign institutional investors (FIIs) turned net buyers of Rs 11.66 billion in Indian equities on Friday after overall selling eased sharply this week as market sentiment improved.
FIIs remained net sellers for the ninth straight week but their weekly selling moderated to Rs 89.91 billion from Rs 302.94 billion the previous week. On the other hand, domestic institutional investors (DIIs) stayed net buyers for a ninth consecutive week at Rs 78.13 billion, though they were net sellers of Rs 36.61 billion on Friday.
The sustainability of the recovery will hinge on earnings growth broadening beyond IT with revenue and margin delivery across financials, consumption and industrials under close scrutiny, analysts said.
Investors are keen on India’s October PMI that will offer insight into domestic demand momentum, while US jobless claims and Japan’s inflation print will shape global rate expectations.
Business
Japanese delegation visits MLFF tolling system near Delhi

A Japanese delegation visited the Multi-Lane Free Flow (MLFF) tolling system in Mundka-Bakkarwala on Friday on the sidelines of the 12th India–Japan Joint Working Group Meeting on Roads and Road Transportation.
The MLFF system provided insights into India’s technology-driven initiatives for seamless and efficient highway travel.
At the MLFFs, the National Highways Authority of India (NHAI) uses a combination of RFID-based FASTag electronic toll collection, automatic number plate recognition (ANPR) and AI analytics to allow vehicles to pass through charging points without stopping, slowing down or remaining in a designated lane.
MLFFs have already been installed at Choryasi in Gujarat, Mundka in Delhi, Gharaunda in Haryana and Daulatpura and Manoharpura in Rajasthan.
While 12 further locations have been awarded for conversion, tenders have also been launched covering an additional 104 toll plazas around the country.
The MLFF at Choryasi on the Surat–Bharuch section of NH-48 was the first to become operational.
The one at Mundka on Delhi’s Urban Extension Road-II was the second.
The expansion plan represents a significant shift from India’s traditional barrier-based toll plazas.
Rather than moving immediately to satellite-based toll collection, the Indian government has opted to build on the country’s established FASTag system and combine it with ANPR and AI.
Expert committees had recommended further consideration of GPS-based barrier-free tolling because of security, privacy and operational control issues, the Ministry of Road Transport and Highways has indicated.
FASTag and ANPR/AI was thus selected as the technology for the current MLFF programme.
The session of the India–Japan Joint Working Group on Roads and Road Transportation Sector was successfully held at Bharat Mandapam in New Delhi.
Discussions focused on advanced construction technologies, bridge and tunnel engineering, sustainable infrastructure and digital innovations, fostering the exchange of technical expertise and best practices.
“The meeting reaffirmed both nations’ commitment to safe, sustainable and technology-driven road infrastructure, aligned with the vision of Viksit Bharat @ 2047,” the Ministry said in a statement.
Business
India-US trade deal 98-99 percent done: US official

Washington, Oct 16: A long-awaited trade agreement between India and the United States is almost complete, with only one or two per cent of negotiations remaining, a senior US official said, signalling that the two countries are approaching a breakthrough after months of high-level discussions.
The official said the biggest issues had already been resolved and that negotiations were continuing at the highest political levels, including between President Donald Trump and Prime Minister Narendra Modi.
“The biggest items have been settled. I mean …., it’s pretty much done. We have that one, one or two per cent left,” the official told reporters during a State Department briefing on Friday.
The remarks came ahead of Secretary of State Marco Rubio’s scheduled visit to India, where he will hold discussions with Indian government officials and leading business executives in Mumbai and Jamnagar.
The official said the two governments remained in constant contact over the proposed agreement.
“We are actively engaged every single week,” the official said, adding that high-level discussions on the trade deal were taking place regularly.
The official cited recent diplomatic engagements involving US Trade Representative Jamieson Greer, India’s Commerce Minister Piyush Goyal and conversations between Trump and PM Modi as evidence of the momentum behind the negotiations.
However, the official also identified a significant complication that had delayed the agreement.
An earlier understanding had been linked to the International Emergency Economic Powers Act, or IEEPA, but the legal framework had to be reconsidered after the law was struck down, according to the official.
The development forced negotiators to revisit elements of the proposed agreement and contributed to several additional months of discussions.
Despite those complications, the official expressed optimism that the remaining differences could be resolved soon.
Rubio is scheduled to travel first to Uzbekistan for meetings with Central Asian leaders before proceeding to India.
In Mumbai, he will meet Indian government counterparts and senior executives from some of the country’s largest companies.
The official said the decision to visit Mumbai rather than New Delhi reflected the administration’s growing emphasis on commercial diplomacy and Indian investment in the United States.
Rubio will also travel to Jamnagar.
The official said Washington was seeking closer engagement with India across information technology, pharmaceuticals, defence cooperation and other sectors.
Further visits by senior American Cabinet officials are also anticipated next year as both governments seek to expand bilateral engagement.
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