Insurance
Third-party motor insurance premium hike may be 40%. Is it justified?

Third-party (TP) claims are undoubtedly a drain on insurance companies, primarily due to unlimited liability amounts, but should IRDA base the TP premium pricing on more than just engine cc? Your TP premium may be subsidising the commercial vehicles responsible for insurance companies’ losses

The Insurance Regulatory and Development Authority (IRDA) has proposed an increase of nearly 40% in third party (TP) motor insurance for private cars in its draft on revision of premium. If you drive a car that’s below 1000cc (Tata Nano and Maruti Alto, for example), your TP premium may increase by 85%, come April 2013. High increase in premium for entry-level cars may be because these cars are purchased by those who have just acquired their driving skills and the possibility of higher TP claims arising from them. Surprisingly, the hike will be only 1.4% for cars such as Hyundai Santro and Maruti Swift, whose engines are between 1000cc and 1500cc. For cars over 1500cc, including Fiat Punto and Ford Ikon, the hike will be of 43%.
 

According to Mukesh Kumar, Head-HR, marketing and strategy planning at HDFC ERGO, “The vehicles in the private car segment with engine capacity exceeding 1500cc are extensively used, usually for longer distances and, therefore, result in higher risk exposure. This leads to relatively high TP losses due to which the hike in premium is justified.”

For goods-carrying vehicles, there is a proposed decrease in TP premium for those not exceeding 12,000 kg. There is hike of 107% for those vehicles in the 12,000-20,000 kg range. Mukesh Kumar says, “The proposed hike is still inadequate for this class, judging from the loss experience. Vehicles with higher tonnage are used for longer distances, mostly inter-state. Therefore, the risk exposure is higher.”

According to Dr Amarnath Ananthanarayanan, CEO and MD, Bharti AXA General, “The TP business is long-tailed, with no upper limit on the claim amount and no limit for when the claim can be filed. This makes risk evaluation and therefore, pricing extremely complicated. Overall industry data may be able to throw light on whether the pricing is adequate to cover the risk. The rate increase is high, but necessary, given the unlimited claim amount for TP. We hope the Motor Vehicle Act is changed to limit the claim amount so that the industry can pass on lower TP premiums to customers.”

Own Damage premiums are based on numerous parameters like car model, location, fuel option, security system and even consider personal data like age, marital status and occupation. The question that one may have is whether engine cc is a good enough parameter to decide the TP premium? There may a need to look beyond the car engine cc to decide the TP premium.
 

For example, geographical area of a private car will have different TP claims experience. For commercial vehicles, there will be more TP claims for those with an all-India permit than those plying in specific areas. Vehicles used 24x7 may have more TP claims. There are specific car makes that may be registered as private vehicles, but are used for commercial purposes and hence have more TP claims. Is it true that going by engine cc is too simplistic?
 

According to Avadhoot Mavlankar, principal officer, Shinrai Insurance Broking Services, “Use of the vehicle and geographical area can help to underwrite the TP risk properly.  Some of my clients’ loaders/excavators and goods-carrying vehicles are registered as public carriers, but ply only within a certain vicinity such as New Mumbai. There is hardly any TP claim. The black-yellow taxis and auto rickshaws have the lowest claim experience in the TP segment.” The proposed hike for auto rickshaw and taxi insurance is 11% and 13%, respectively.
 

According to an industry source, “Many TP claims from commercial vehicles arise from accidents with trucks and tempos with all-India permits. With such vehicles, the risk is higher than with commercial vehicles restricted to a city. The transportation lobby is strong and they are able to keep the TP premium low.”
 

Many insurance companies are keen to underwrite specific commercial vehicles that are “good risk” for their business. Third-party motor insurance is the only segment where the tariffs are set by IRDA. The Authority has made use of the data available with the Insurance Information Bureau for the experience period of the Underwriting Years (i.e. Policy Years) 2007-08 and 2008-09 in respect of number of policies, claims reported and amount of claims paid up to 31 March 2012.
 

The TP liability cover, which is mandatory in India, does not provide any benefit to the insured; however, it covers the insured’s legal liability for death/disability of third party loss or damage to third party property.
 

All stakeholders are invited to provide their comments on this draft proposal so as to reach the Authority, also by e-mail addressed to [email protected], on or before 1  March 2013.
 

Read - Road Accident: Know your financial rights

Save on your Car Insurance

User

COMMENTS

Sanjay Tiwari

4 years ago

One of the ways to control could be start some small amount of co-payment by the Driver / owner. This will make the drivers / owners more responsible on the road. sanjay Tiwari

Hyderabad blasts: How warnings about ammonium nitrate by former union secretary were ignored

Every day's delay in tightening the oversight on ammonium nitrate has had that much of a disastrous impact. Should the government once again fail to learn these lessons now and wait for the next blasts to occur, asks EAS Sarma

Anguished over the loss of lives in the Hyderabad blasts on Thursday, EAS Sarma, former secretary of the Government of India (GoI) has again raised the issue of uncontrolled movement of ammonium nitrate (AN) in the country. Since 2006, the former secretary has been writing letters to the home ministry, the National Security Agency (NSA), the ministry for industrial development and the Andhra Pradesh government about the possible misuse and uncontrolled movement of AN in the country. And yet the government continued to ignore the warnings which led to the blasts in Hyderabad.

 

Mr Sarma, in a letter written to the prime minister, said, “When I wrote this (he wrote to the home secretary in May 2012 and again in December 2012, about the need to keep an eye on import and movement of AN) letter, I sincerely hoped that someone somewhere in the corridors of power in your government would feel responsible and act. My hope continues to be a mere unfulfilled wish, while innocent lives continue to be lost as a result of the omissions on the part of the authorities.”

 

The twin blasts ripped through a crowded market in Hyderabad on Thursday, leaving 16 dead and over 120 injured.

 

“In the past, there were instances of AN trucks missing but there is no information on the outcome of the cases registered! It is possible that the chemical has gone into the hands of the extremist groups. Even one kg of AN in the hands of an extremist could cause havoc and lead to loss of innocent lives as it has been the case with most instances of terrorism  during the last several years,” he added.

 

Referring to the use of AN in Hyderabad blasts, Mr Sarma says, “A stitch in time may have saved nine”. Here are the questions raised by the former secretary to the prime minister...

 

  1. Why should such large quantities of ammonium nitrate be permitted to be imported in the first instance? Are there anti-national groups behind the unusual surge in the imports during the last three years?
  2. Why has the government framed the ammonium nitrate rules in such a casual manner as to permit the chemical being pilfered in the name of “allowed losses”, only to pass it on to the terrorist groups in different parts of the country?
  3. Why has the government left it to the importing firms under Rule 18(1) to import the chemical in a loose form, not in sealed bags? Is there a hand of someone having links with the terrorist groups in giving a final shape to such a set of loosely-worded clause?
  4. Rule 12(5) (j) has clearly stipulated certain ceilings on the quantity of the chemical that can be stored at a place. It is 200 tonnes as it is mandated in the Rule. Each storage godown at Vizag has a storage capacity of 20,000 tonnes. There are at least six such storage godowns in this city. There must be a similar situation in other cities as well. Have the authorities failed to enforce this Rule? If so, why?
  5. Table 1 in Schedule III of the Rules stipulates the ‘safe’ distances for the storage of the chemical. It is doubtful whether this stipulation has been complied with anywhere. Has there been a failure on the part of the authorities?
  6. Countrywide, some surprise inspections should be conducted to see as to what extent these Rules have been enforced. How many such inspections have been conducted and how many of those involved in storage, movement and trade of the chemical have been proceeded against, for non-compliance?
  7. The Rules stipulate approved “route plans” for the trucks carrying the chemical but, despite my repeated appeals, the concerned ministries have not enforced this by making it mandatory for the trucks to be fitted with GPS and for the drivers to report to the police stations en route the approved route. Why has the ministry of home affairs not acted on this suggestion?
  8. I had suggested to the home ministry that it should direct the states to verify the antecedents of the importers, the stevedores, the owners of the storage godowns, the transport operators, the drivers of the trucks and the wholesale and retail vendors of the chemical. It is possible that there are many weak links in this chain that present potential threats to public safety. Why has MHA not ordered such verification?
  9. Both USA and OECD have adopted stringent protocols for the manufacture, storage, transport and retail trade in ammonium nitrate. I have made these available to the ministry of industrial policy & promotion. No tangible action seems to have been taken on my letters. Why?
  10. There have been instances of theft of ammonium nitrate in both small quantities and truckloads at different places in the country. If the cases involving this can be analysed holistically, the pattern of its use or misuse can be arrived at. I have cited such instances in my correspondence with MHA. Why has this not been looked into?

 

The way the government has moved in notifying this chemical as an ‘explosive’ first, then issuing the Rules, has not been one driven by a sense of urgency and determination to regulate the use of the chemical. “Every day’s delay in tightening the oversight on ammonium nitrate has had that much of a disastrous impact. Should the government once again fail to learn these lessons now and wait for the next blasts to occur?” the former secretary questioned.

 

He said, “While post-blast investigations are extremely important and they need to be carried out in a highly professional manner, the pre-emptive measures that I have listed out will help minimise the scope for the anti-social groups to carry out their dastardly acts of terrorism.

 

Sometimes, a stitch in time could save nine later! Had MHA taken action earlier, perhaps the Hyderabad blasts would not have taken place, as Ammonium Nitrate would not have been available easily."

 

Read more

Is anyone keeping eye on ammonium nitrate movement in India, asks EAS Sarma

User

COMMENTS

NSriramamurty

4 years ago

TOI dt.26-2-2013 has Brought out many Security Lapses. (1)With Terror Strike in hyderabad -Police Investigation revealed Many CCTV Cameras installed in Hyderabad Parks ,which are visited by 50,000 People everyday with Famlies, are not working.When Police washed off its Hands by issuing notices ,which is used conveniately to Close those Parks immediately thenon.(2)4 CCTV Cameras at BusDepot and Traffic Places at terror strike place are not working fully.with little views avilable ,Police tries to indentify the Terror Plotter.But they are not able to Expand the Visuals.(3)Police Intends to take US FBI help ,if Gujarat FSL fails in helping them. (4)How INDIA made Thousands of CCTV Cameras Installed without envisasing and getting Advanced Equipment required to Fully Study Camera Footages.(5)PIL filed in AP High Court on the Subject on Govt. failure can be utilised by all by Filing Adjoiners to PIL by Money Life ,(a)on Ammonia Nitrate(b) Misuse of Police by Politicians for their Securing ignoring Common indians-with whose Taxes Police are Paid but Services Misutiled (c)NonReduction of VIP Security Suggested by Supeme Court , etc so that HC can study all angles and Useful Orders may come out

Shantharam Shenai

4 years ago

Alfred Nobel who invented TNT regretted his own action, after seeing bad obituary after it was mistakenly announced he had died ( his brother had died ) INDIA like other states kept their DUAL USE Ammonium Nitrate factories going by promoting it as a necessary component of chemical farming methods. The price paid is now beginning to being understood with damage to health, ground water, river water & soil ecology also. The efficacy of organic farming methods is coming to the fore with extraordinary record breaking results being demonstrated for wheat, potato, Sitaphal, etc. Soon, it will become obvious that AN is unnecessary of agriculture. Jai Jawan, Jai Kisan

PRABAL BISWAS

4 years ago

Had I been the PM I would have stopped everything overnight.

NSriramamurty

4 years ago

GOI is desiring friedship with Pakistan, with False notion that continuing Dialogue is better to discuss some Problems and Trade Improvement telling that they themselves are suffering by Terrorists in their Region.As Pakistan is Protecting India's most wanted terrorists in Pakistan ,as revealed by Kasab.Sayyeed,required by us ,is not allowed access by us ,Pakistan telling that GOI has not given sufficient informatio, convincable to Pakistan Courts that he is involved in terror activities in India. ( 2 ) IM People arested by Police in a state, do not know that they are IM activists Planning Terror Strikes.Full Computerisation of all offenders ,with their Photos,is to be done with Facility by intellence Wings in all States to access those details throgh Server.It helps in Sychronising data, link up and Consider their crimes in Each one's Life.This gives useful clues.

Eagleear

4 years ago

As far as i know, PM keeps repeating the same mundane dumb comment "the culprits must be punished" for all terrorist activities, be it Mumbai attack or german bakery attack or jhaveri bazar attack and now this hyd attack. he cannot and does not say or do anything more. When the Head is this way, what can you expect from his deputies?? Its better for each citizen to take care for themselves wherever they go, i dont think govt will ever protect us....we are by ourselves now to be safe...

ASHISH SINGHAL

4 years ago

Maybe if courts would have intervened this could have been prevented. But this raises a bigger question- does the government has any moral responsibility or acumen to take preemptive action or it will act only when compelled to do so. Shame on them

REPLY

nagesh kini

In Reply to ASHISH SINGHAL 4 years ago

At this rate of failure of the governance on the part of the Executive we may have to call upon the only two other Constitutional bodies - the Judiciary and the CAG to take over the reins of administering the vast territory. They also will find it a handful considering the mess that the politicians of all hues and colours have left us in! God help us!

nagesh kini

In Reply to ASHISH SINGHAL 4 years ago

At this rate of failure of the governance on the part of the Executive we may have to call upon the only two other Constitutional bodies - the Judiciary and the CAG to take over the reins of administering the vast territory. They also will find it a handful considering the mess that the politicians of all hues and colours have left us in! God help us!

Krishnan

4 years ago

When you have dumb PM, whose only credential has been stolen glory from PV Narasimha Rao and whose only ambition is to serve the dame and to visit Pakistan , sacrificing the security of India in pursuit of a mirage.

NSriramamurty

4 years ago

Shocking to see that even Former Union Secretary's Advises - very essential, as Proved - are not Acted upon by Govt.Even after his repeated Follow ups with Top Authortative People in India.
Expect that atleast PM will Respond.

Aftek properties under the hammer. Another one from the infamous 'K-10 club' goes belly-up

Properties and even the headquarters of Aftek, the Ranjit Dhuru promoted company are under the hammer since last year. However, the lenders still cannot find a buyer. Aftek is another one of Ketan Parekh's 10 stocks which have self-destructed

Aftek (erstwhile Aftek Infosys), one of 10 chosen stocks of Ketan Parekh that was ramped by the speculator and later came to known as K-10 stocks, is under hammer since last year. Lenders such as Bank of India (BoI) and State Bank of Bikaner & Jaipur (SBBJ) are trying to find buyers for Aftek's property in Pune's Rajiv Gandhi Infotech Park and the company’s head office in Dadar, central Mumbai.

 

According to sources, till date SBBJ has not been able to find a buyer for the company’s main office ‘Aftek House’, a six storied commercial building with an area of 269.23 sq meters located near Shivaji Park on Veer Savarkar Marg in Mumbai's Dadar area, one of the prime locations in the city.

 

SBBJ, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, took over Aftek's head office in February 2012. It then put Aftek House under the hammer in May 2012. The reserve price for the deal was Rs64.44 crore. However, it could not find suitable buyer. (http://foreclosureindia.com/viewAd.php?fid=82336&src=ads/SBBJ-A-mihir.jpg)

 

The bank, then again issued tender-cum-auction sale notice on 14 August 2012 for selling Aftek House. Despite lowering the reserve price to Rs56.57 crore from Rs64.44 crore, the lender could not find any buyer. (http://bankpropertyauction.com/photos/bpics/706-5452761.jpg)

 

Similarly, during February 2012, BoI, put Aftek's plot in Pune’s Hinjewadi area under the hammer. The reserve price for the plot admeasuring 9,340 sq meters was Rs32 crore. The auction on 14 March 2012 also failed to get suitable buyer. JVD Recovery Agency, the agent appointed for the auction while confirming the news that the property is still on sale has asked us to give an offer!

 

Aftek was started by Ranjit Dhuru, a scion of a family that owned large tracts of land in the Dadar area. There are two roads named after the Dhurus, with one sub-area is known as Dhuru Wadi (Dhuru colony). The main architect of Aftek was also staying in his 200-year old ancestral house at Dadar.

 

Ranjit Dhuru is the chairman, chief executive officer and managing director of Aftek. According to Bloomberg Businessweek, he was paid Rs75.02 lakh as compensation during 2012.

 

Fate of the K-10 stocks...

Global Telesystems, Zee Telefilms, Himachal Futuristic Communication (HFCL), Silverline, Satyam Computers, SSI, Aftek Infosys, DSQ Software, Ranbaxy and Pentamedia were Ketan Parekh’s favourite stocks. Using the money from Global Trust Bank, Madhavpura Mercantile Co-operative Bank and other sources, Parekh inflated share prices of these companies.

 

Soon after the 2001 scam was exposed, the rigged shares lost their values so heavily that thousands of people lost their savings. Some banks including BoI also lost significant amounts of money. Global Trust Bank and the Madhavpura Cooperative were driven to bankruptcy.

 

Barring Zee and Ranbaxy, all other K-10 stocks self destructed. Ranbaxy has been sold to a Japanese company. Global Tele is alive but struggling to continue a viable business. Satyam turned out to be a bigger scam and got taken over. DSQ is defunct. HFCL (name changed to Dynamic Infotel), Pentamedia, Silverline and Aftek Infosys are nominally quoted. SSI promoters sold off its their software business converted the company into a shadowy real-estate company called PVP Ventures.

User

COMMENTS

Ramesh Poapt

4 years ago

Mr chandu, ML duty is to present the big story which none covered.ML is proactively trying to unmask the hidden scams status,in the best interest of small investors.
If u want to find a phoenix,you may dig deeper at yr risk. some magazines/brokers play trap in penny stocks in a big way! adb!

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)