CURRENT SCENARIO VEHICLE POPULATION STATUS OF MOTOR OUTG0ES IN OD OUTGOES IN LIABILITY
TARIFF
ITS
HISTORY
CONCEPT ALMOST 100 YRS OLD. INSURANCE ASSOSIATION OF INDIA MANY COS. WERE MEMBERS KNOWN AS TARIFF COS.
LAID DOWN RULES, RATES, CONDITIONS DISCOUNTS ADD--ON COVERS ETC. ADD HAD TO BE STRICTLY FOLLOWED
TARIFF COS. HAD IDENTITY CONFIDENCE, FAITH OF THE INSURING PUBLIC SINCE MANY BIG & REPUTED COS WERE MEMBERS. CONSCIOUS DECISION NOT TO INDULGE IN UNHEALTHY COMPETITION
PRICE THE PRODUCT MAY BE HIGHER BUT PROTECTING FROM THE
DISASTER
THIS PROCESS IS CALLED
TARIFF
TARIFF IS SEEN AS THE PROTECTIVE RING.
CONSIDER FROM DAILY LIFE GARDENING: PLANTING TREES IN BACKYARD IRON FENCE AROUND FOR SAFEGUARDING/ PROTECTION IN ITS INITIAL YOUNG DAYS
NO WHIMSICAL PREMIUM RATING
COS. TO JUSTIFY PRICING & OFFER ONLY
AFTER IRDA APPROVAL
HOW TO GO ABOUT THIS WHOLE PROCESS OF DETARIFF?
TWO BASIC ASPECTS: ASPECTS:-RATE STRUCTURE & PRODUCT DESIGN
SUGGESTIONS
RFRS:-----RISK RFRS:----RISK FACTOR RATING SYSTEM IT IS PREVAILANT IN OVERSEES MARKET. E.G. SINGAPORE MARKET,AUSTRALIA, CANADA, ENGLAND, GERMANY, JAPAN ETC. THIS SYSTEM CAN PROVIDE STATISTICALLY BASED PRICING AS OPPOSED TO SI/ IEV/ IDV SYSTEM CURRENENTLY EXISTING IN INDIA
EXISTING IEV/ IDV BASED PRICING HAS BECOME OUTDATED e.g.
COST OF ONE BUMPER OF HIGH VALUE VEHICLE MAY SIMPLY WIPE OUT ENTIRE PREMIUM
OTHER FACTORS THEFT--PRONENESS OF VEH OR ITS 1. THEFT PARTS 2. FREQUENCY AND NATURE OF ACCIDENTS 3. NAMED DRIVER 4.
OCCUPATION OF OWNER
TRAFFIC CONVICTION RECORD 6 SPECIAL DRIVING EDUCATION, SAFETY TRAINING 7 MEMBERSHIP OF AUTOMOBILE ASSOCIATION-------ASSOCIATION --------ETC. ETC. ABOVE FACTORS ARE INDICATIVE NOT EXAUSITIVE
STATISTICAL DATA ON THE ABOVE MENTIONED FACTORS WILL UNDOUBTEDLY HELP ACTURIAL SCIENCE TO FRAME THE RATE STRUCURE HENCE STATISTICAL DATA OF VITAL IMPORTANCE
BUT----BUT -----??
IF WE DO THAT IT WILL BE THE BIGGEST
BLUNDER WHY?
INC. AMT/CL. OUTGO IS TOTALLY DISPROPORTIONATE TO COS ACTUAL LIABILITY AS PER THE PRODUCT BOTH IN OD & LIABILITY
PROFESSIONALS & AUTOMOBILE ACCIDENT TECHNOLOGY SCIENCE IDENTIFIES THIS EXCESS OUTGO AS INFLATED CLAIMS--CLAIMS---LEAKAGE
CLAIMS OUTGO GOES UNCONTROLLED DUE TO VARIOUS REASONS, INTER ALIA, LACK OF SCIENTIFIC/MEHODICAL MANAGEMENT SYSTEM
HENCE WORKING OUT RATE PATTERN ON THIS OUTGO WILL MEAN UNSCIENTIFICALLY HIGHER PREMIUM RATE
IF PROFIT ANGLE IS TO BE THE PRIME FACTOR
CURRENT RATE PATTERN IS LOPSIDED. E.G. PVT.CAR:-PVT.CAR: OD:--OD: ---RANGE RANGE Rs.3.039% TO Rs. 3.698%, HARDLY DIFFERENCE OF 0.659% WHILE RISK VARIATION IS TREMENDOUS
LIABILTY PR.: PR.:-Rs. 400/ 400/-- TO Rs. 600/ 600/--
CROSS SUBSIDY EXISTS
COMM. VEH: VEH:-- GOODS [A1] OD:-1.726% TO 1.839% OD:RATE VARIATION: VARIATION:-- 0.113% LIABILITY:-- Rs. 3280/ LIABILITY: 3280/-- TO Rs.3980 RISK VARIATION TREMENDOUS--TREMENDOUS ---AND AND SO ON.
EXPERIENCE, EXPERTISE OF MOTOR & AUTOMOBILE ACCIDENT TECHNOLOGY WILL BE MOST ESSENTIAL TO PRICE THE PRODUCT BOTH IN OD & TP [SUBJECT MATTER OF INSURANCE IS AUTOMOBILE]
AUTO-ACCDTAUTOACCDTTECHNOLOGISTS/MOTOR RISK MANAGERS TO ASSESS RISK OF INDIVIDUAL MAKE & MODEL E.G.
G.M.PRODUCTS---OPEL, G.M.PRODUCTS--OPEL, CHEVROLET, CORSA, SWING, TAVERA TOYOTA TOYOTA COROLLA, QUALIS, CAMRY SKODA, MERCEDES, FORD ETC. MITSUBISHI LANCER. COMMERCIAL VEH TATA 3516
STUDY OF MODEL DESIGN POSITIONAL STRUCTURE OF ACCIDENT PRONE PARTS, ELCTRONIC PARTS, TURBO ETC.
TO KNOW FROM THE MFGS THE STANDARD OF ACIDENT REPAIRING FACILITIES AND COMPETENCE OF THE DEALERS E.G. BODY PARTS,FRAMES, AXLES ETC.
SINCE THESE ARE THE REAL CONSIDERATION FACTORS TO PRICE THE INDIVIDUAL PRODUCT METHODICALLY FOR VIABILITY
BETTER UNDERSTANDING WILL PREVAIL
MY VIEWS: EACH MODELWISE RISK ASSESSMENT IS A MUST. BROADLY SPEAKING IN GENERAL: SCOPE FOR 20% REDUCTION OF PRESENT RATING IN OD WHILE:WHILE:-
LIABILITY PR. NEEDS TO BE LOADED BY 25% ---30%. 30%. THIS IS ONLY POSSIBLE FOR THOSE WHO WILL HAVE A DESIRE TO MANAGE THE PORTFOLIO SCIENTIFICALLY
IN GENERAL:_ ACCIDENT RATE IN INDIA. CLAIM REPORTING RATE.
CONTROL & ELIMINATE THE LEAKAGE RESULTING IN EXCESS OUTGO.
THE EXISTING LEAKAGE WILL HAVE TO BE ELIMINATED COS WILL HAVE TO BE AGGRESSIVE IN THEIR MARKETING STRATEGIES
THIS WILL POSE A REAL CHALLENGE TO EACH CO. THOSE WHO DO NOT ADOPT SUCH A GOVERNANCE
WILL BE FIGHTING FOR SURVIVAL
CHALLENGE WILL BE TO KEEP STRICTER SCIENTIFIC CONTROL OVER
SURVEYORS PERFORMANCE ADVOCATES PERFORMANCE
CHALLENGE AHEAD IS TO BE PROFESSIONAL MOTOR MANAGERS
NO COMPROMISE ON THIS ASPECT
IN THE FREE MARKET ERA, NO SCOPE FOR CASUAL INEFFICIENT APPROACH OF MANAGEMENT OF PORTFOLIO
FOLLOW ANY PATTERN
SCIENTIFIC RISK MANAGEMENT/ EFFECTIVE MANAGEMENT WILL HAVE TO BE ENFORCED STRICTCLY WITH PRECISION