In 2008, action is going to be more exciting in the non-life segment of insurance. It begins right in January when the industry will move towards a free pricing regime. In April, insurers will complete the second round of de-tariffing by altering the wordings of motor, fire and engineering policies.

If this year saw a sharp cut in premium rates — about 20 per cent in motor insurance own damage cover and 51 per cent in fire and engineering insurance (the maximum allowed by regulator Insurance Regulatory and Development Authority) — the coming year will see a lot of price negotiation and increasing customisation. “Whatever cut we had to offer to the customer we did it this year,” said Oriental Insurance Company CMD M Ramadoss. “Next year, the premiums would be based on the record of the customer. So it is difficult to predict an across the broad cut or increase.” Subsidies are history. “Free pricing would ensure that good policyholders no longer cross subsidise the bad ones,” said Optima Insurance Brokers CEO Rahul Aggarwal.

On the drafting side, General Insurance Council (GIC) has recommended common wordings to ensure that there is no confusion on terms and definitions. “To begin with, there will be a standard policy across insurers having common wordings,” said Iffco-Tokio CEO and MD S Narayanan .“It is by subtracting and adding features on this, we will enable customisation.” Health insurance too will be the key focus next year as IRDA has proposed halving of capital requirements to Rs 50 crore for standalone health insurance companies. “A company catering to a single product suite may not require a capital of Rs 100 crore and the reduction would encourage more standalone players to come in,” said IRDA chairman C S Rao. The business is there for the taking —penetration of health insurance in India stands at just 2 per cent.

... contd.