IRDA releases new guidelines for Motor Insurance Declined Pool

IRDA wide its circular has created a Declined Risk Pool for Act Only Commercial Vehicle Third Party Insurance with affect from 1.4.2012.

The framework for Indian motor third party declined risk insurance pool for commercial vehicles are as below:-

1. The purpose of creating the Indian Motor Third Party Declined Risk Insurance Pool for commercial vehicles is to have equitable and fair sharing by all insurers, simplicity to administer and to bring claims management efficiency.
2. The declined risk pool shall apply to commercial vehicles for stand alone third party insurance (act only insurance) . No comprehensive motor insurance policy or part thereof shall be ceded to the pool.
3. Miscellaneous and special class of vehicles falling underclass code 23 of the all India motor tariff shall also be excluded from the scope of the pool.
4. All existing general insurers shall be admitted as a member of the new pool.
5. Specialist insurer not licensed for the motor insurance business shall not be members of the declined risk pool.
6. The sessions to general insurance Corp shall be in accordance with the obligatory cessions which currently stands at 10%.
7. General insurance Corp shall act as administrator of the declined risk pool.
8. IRDA has defined the role and responsibilities of declined risk pool administrator and insurer.
9. The premium in the pool shall be reviewed annually based on formula notified by the authority in its order dated 15 April 2011.
10. The premium for declined risk pool shall be determined in accordance with the actuarial principles which shall be used by all insurers and shall be notified by the authority from time to time.
11. An agency commission our brokerage not more than 1% shall be paid for third party motor insurance commercial vehicles.
12. No ceding commission in respect of the business ceded to the declined risk pool shall be paid.
13. GIC as administrator shall be paid a fee on actual cost basis.
14. Any general insurance not willing to write the third party insurance shall refer to the declined risk pool.
15. No insurer can refuse to write the risk.
16. IRDA has defined the parameters for ceding the proposals to the declined risk pool
17. Premium for motor third party insurance or commercial vehicle shall be same whether underwritten to its net account or ceded to the declined risk pool.
18. IRDA has also specified the manner of calculating the obligations.
19. Every general insurance shall appoint a Grievance Redressal officer to look into grievance of policyholder in respect of non-availability of motor third party insurance

Download the full Report