With difference cropping up between general insurance players, the future of the Indian Motor Pool seems to be uncertain.
Insurers differ over the utility of the pool, some want it dismantled
KOLKATA: With difference cropping up between general insurance players, the future of the Indian Motor Pool seems to be uncertain.
Most private players believe the pool has outlived its purpose and want a complete review. A course correction should be done, they feel, as the pool is a strain on balance sheets.
The motor pool was formed to take over third-party risks of commercial vehicles after insurers started denying cover on grounds of high claim ratios.
Its success had the General Insurance Council thinking of corporatising it within the next one year.
But at a recent meeting of pool members, there were calls for major changes in its structure.
Sources said that some private players even called for a timeline to dismantle the pool. The reason? They feel there is no need for a pool now as companies have actively started underwriting commercial vehicle businesses. And, unlike earlier, there are no complaints of insurance denial now.
Earlier, when there was a supply-side constraint, the pool’s existence was justified, they said.
One private insurer suggested scaling down the pool to a “decline risk pool” from April 2008. Other suggestions included re-making the pool into a “claims vertical” and a separate company.
Some players said the pool would have an adverse effect on their balance sheet and it would be difficult to accurately quantify the pool’s impact.
The management of the pool and the reporting of data, both from the premium and the claims side, remain a crucial issue.
Some insurers also felt there was a need for measures to reduce the number of un-insured vehicles and increase the premium base available to support the losses.
A veiled implication from private players of public sector inefficiencies getting transferred to the pool has left public sector companies grumbling.
One leading national insurer said that the existence of the motor pool allowed all companies to write third-party premium of commercial vehicles.
Companies may not write these risks in a big way in future without the pool, the chairman and managing director of the insurer said.
All PSU insurers will not be able to write all types of commercial vehicle third-party policies without the pool arrangement, he said.
g_nandini@dnaindia.net
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