Government, insurers set to chart out road map for general insurance sector

NEW DELHI: The government and the general insurance sector will chart out a road map to improve the penetration of health, fire, motor and other non-life risk covers in the country.

"Our (general insurance) penetration rate is as low as 0.71%. How do we improve it to average standard, which is 1.5 to 4%? The roadmap is to be prepared by all of us," Financial Services secretary DK Mittal told reporters after a meeting of the general insurance industry with finance minister P Chidambaram on Monday.

The finance minister has already met life insurers earlier this month. The premium underwritten by the general insurance sector during April-July rose by 18.69% to Rs 22,162 crore. The penetration of general insurance products in the country is only 0.71% of GDP.

The heads of general insurance companies told the finance minister that motor insurance, which has 41% share in the non-life insurance sector, faces major challenges because of regulated tariff, unlimited liability, non-jurisdiction restriction for filing the claim and underinsurance among others. "Insurers have suggested de-tariffing of motor TP (third party) premium and cap on liabilities etc among others," the finance ministry said in a release. For the health insurance sector, it was suggested that a proper mechanism be put in place whereby an appropriate pricing regime for group health insurance is adopted.