Dear Patron,
It is pertinent to note that vide notification issued in the year 2006, tariff has been in force for Fire,
LOP and Engineering class of insurance with respect to WORDING including general regulations,
conditions, clauses, policy wordings etc. BUT other than those relating to premium / premium
rating.
The pricing part was only de-tariffed and currently pricing is driven by market agreement. Reinsurers
and association of insurance companies has agreed for a platform which has been going on for last
several years, which includes implementation of IIB rates, fixation of fixed rates for STFI & EQ, recent
implementation of good feature and claim experience based discount w.e.f. 01.04.2023, etc. The
last meeting that has happened at General Insurance Council meeting on 12th March 2024, it was
decided that max. 15% discount can be given on IIB rate and no discount can be given on STFI and
EQ rate. Thus pricing is driven by market agreement and this practice will continue.
IRDAI has recently issued circular/notification dated 20.03.2024, as per which above referred tariffs
would get de-notified entirely and no longer in force effective 01.04.2024 (circular/notification
dated 20.03.2024 attached for reference).
Thus now with this circular/notification, the changes would be there in POLICY WORDING, which
were standard in Fire/IAR, LOP and Engineering (MBD, EEI, EAR, CAR etc) Policies. In future, the
policy wording would be changed and can be modified based on risk requirement of the industry.
Based on the above differential wordings the pricing/ratings may also vary as per the
product/coverage features.
However the process would take some time, as the modified/new policy wording has to be
approved by IRDAI (as per point no. 4). It would take some time for forming the policy wording,
getting it vetted by reinsurers, filing with IRDAI and obtaining IRDAI approval for using it.
In view of above, we do not expect immediate much changes in the existing policy wordings and
market agreement driven pricing practice. But in future, with implementation of subject
circular/notification, it is expected that insurers would offer different wordings for above referred
class of insurance. Beacon team would keep track of it and would review and would keep our clients
updated about the market development.
Please find the notification from IRDAI below.
Team Beacon.