Vehicle insurance sector is set for competition

Motor insurance is the single largest business line for insurance companies and is also the fastest growing, on top of increased sales of two hweelers, four wheelers and commercial vehicles in India. Motor insurance comprises insurance for the vehicle and insurance of vehicle owners' liability towards third parties. The Insurance Regulatory & Development Authority (IRDA) has allowed insurers to marginally increase the rates for third party insurance - less profitable area, where as it has freed the pricing for motor vehicle insurance. However, , IRDA has asked insurance companies not to offer insurance for automobiles at rates that are lower than 10% of the tariff. In property insurance, the insurance regulator has fixed a floor of 20% below existing tariff rates.

Motor insurance tariff, along with other insurance products such as fire and property, will be withdrawn from January 1, 2007 when detariffing in the general insurance sector is set to kick off.

The above detariification in the insurance sector by the Government will start a healthy competition among the palyers, benefiting the customers with innovative products being introduced in market by various companies in this sector.