New index to link insurance premium to inflation soon

Soon there would be an index to indicate the rate at which premium for general, health and motorcar insurance is rising, in sync with inflation.

An expert committee under the chairmanship of Sriram Taranikanti, Financial Adviser, Insurance Regulatory and Development Authority (IRDA), has been formed to work out the index.

The committee, which also comprises officials from the government and the Reserve Bank, would decide on the periodicity of the proposed index as also the products to be covered in the basket of the cost barometer, an official told PTI.

It is in line with a proposal to cover more services like banking, health, aviation and telecom sectors into the inflation indices.

“We have identified 8-10 sectors which form part of the Services Price Index… We are starting with insurance sector,” the official said.

These indices are common in the developed countries particularly in the US, the UK, Australia and Japan. The consumption of these services is quite high in India as well and is rising at a fast pace.

The committee would capture the services cost data from 2007 onwards. IRDA would provide all the logistics support to the committee which will also interact with different stakeholders of the insurance sector.

The services sector contribute an overwhelming 55 per cent to the country’s gross domestic product.

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