To,

CEOs of General Insurance Companies
&
Chairman, General Insurance Corporation of India

Re: Rationalization of Motor Third Party Pool for Commercial Vehicles w.e.f .1.4.2010.

The Authority has from time to time received representations from general insurance companies who are members of the motor third party commercial vehicles pool that the present system of monthly transfer of premiums to the pool administrator should be discontinued.
In this regard, the Authority has now decided as under:

1. The present system of monthly transfer of funds by the insurance companies to the pool administrator shall be discontinued with effect from 1/4/2010.
   
   
2. The companies shall submit quarterly statements in respect of the motor commercial vehicle business transacted on account of pool duly audited by their statutory auditors.
   
   
3. The statements of accounts for every quarter shall be submitted so as to reach the pool administrator before the last working day of the succeeding month of each quarter.
   
   
4. Since the motor third party business is expected to run on a ‘no profit no loss’ basis, there shall be no ceding commission in respect of the business ceded to the pool with effect from 1/4/2010.
   
   
5. It will be obligatory on the part of the insurance companies to segregate funds on account of the pool business in their accounts and invest them in a manner as provided in the IRDA’s Investment Regulations.
   
   
6. The business transacted by insurance companies on account of pool and also investment of the funds shall be specifically confirmed by the statutory auditors of the company in the annual accounts of the company.
   
   
7. The Appointed Actuary of the insurance company shall also confirm in his annual report, the incorporation of the pool liabilities, including revisions, in the company’s accounts.
   
   
8. Each member company shall be responsible for remittance of monies to the pool administrator on a quarterly basis along with the quarterly statements. Any delay in remittance shall attract interest for delayed payment @ 10%p.a. as agreed between the pool members in the meeting of the General Insurance Council.
   
   
9. The pool administrator shall continue to prepare and submit half yearly and annually audited accounts for the pool and also appointed actuary’s annual report. The annual audited accounts shall also incorporate any revision in liabilities.
   
   
10. Pool administrator shall conduct periodical inspections of the member companies to assess their efficiency in settlement of claims and also verify the accuracy of the quarterly statements in respect of the pool business.
    
    
11. The fees of 1.25% of the premium to the pool administrator will continue until revised. As has been decided by the members in the General Insurance Council meeting held on 29/01/2008 all operational expenses (including hardware and software) shall continue to be met by the pool administrator.
    
    
12. The automated transaction level data (data upload) will continue to flow from the companies to the pool administrator as at present.
    
    
13. Treatment of monies remitted to the pool administrator up to 31/3/10. The pool administrator shall follow up with the insurance companies to recover all monies payable to the pool up to 31/3/10. The fund after adjustment will be distributed back to the insurers by the pool administrator after due reconciliation. For this purpose the pool administrator shall prepare statements of accounts duly audited by their Chartered Accountant. This process shall be completed by 30.9.2010.
    
    

This is issued with the approval of the Competent Authority.

.        Sd/-         
(Prabodh Chander)
Executive Director

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