October 31, 2002

CIRCULAR

To All General Insurers

Re: Ceiling on Loading of Premium and Acceptance of Exclusive Third Party Motor Proposals

Reference is invited to TAC's circular No. TAC/MOT/6/2002 dated October 23,2002.

Arising out of the meeting held at Hyderabad on October 28, 2002 in which CEOs of General Insurance Companies and representatives of Transport Operators participated, it is reiterated that:-

1. No insurer shall refuse proposals in respect of Liability Only covers for vehicles complying the Motor Vehicles Act provisions as to fitness.

2. Since the loading on the tariff premium for adverse claims experience for the first renewal is stipulated not to exceed 100%, there cannot be any loading beyond 100% for the renewals falling during the one year period commencing from July 1, 2002. In case the experience continues to be adverse in the second year or third year of the renewal, insurers can, further, load the premium upto 100% of the basic tariff premium. There shall be no uniform loading of 100% in all cases. The loading upto 100% is to be made in individual cases depending upon the claims profile. In cases where no claims have been lodged in the previous year or where the owners enjoy the no claims bonus as per tariff, no loading should be made.

3. Insurers shall advise their operating offices suitably so that excess loading if any, collected in violation of (2) above and of the norms stipulated vide TAC's circular dated October 23, 2002 are duly refunded.

4. Insurers, whether in the public or private sector, shall not refuse to underwrite motor insurance business in respect of any class of vehicle. The above instructions may be noted for strict compliance.

(N. Rangachary)
Chairman