INSURANCE REGULATORY ANDDEVELOPMENT AUTHORITY OF INDIA
24.04.2020
Reportof the Working Group (WG) to revisit the IRDAI (Obligation of Insurer inrespect of Motor Third Party Insurance business) Regulations, 2015
1. The Authority videorder ref:IRDAI/NL/ORD/MOTP/149/08/2019 dated 28.08.2019constituted the Working Group to revisit the IRDAI (Obligation of Insurer inrespect of Motor Third Party Insurance business) Regulations, 2015
2. The WG has come up toa conclusion that the MTP Obligation shouldbe a function of “number of vehicles insured/uninsured” instead of “premiumderived from motor third party insurance business” and accordingly a simple& equitable formula for calculating the MTP Obligation has been proposed.
3. The following is a summary of therecommendations of the WG:
A. The Obligation of an Insurer O(n)in respect to Motor Third Party insurance business for a FinancialYear(n) should be arrived, for each category of vehicles defined in (B), asbelow:
a) Obligation of the insurer in the(n-1)th financial year = O(n-1)*
b) Percentage Market Share of theinsurer as on 31st March of the (n-2)th financial year based onGross Domestic Premium Income (GDPI) = M(n-2)
c) Number of uninsured vehicles asdetermined by IIBI for the (n- 2)th financial year expressed inabsolute numbers independently for each category of vehicles defined in (B) = V(n-2)
d) Percentage of the uninsuredvehicles (Insurance factor) intended to be insured in the financial year underconsideration. The Insurance factor shall be determined and declared by theAuthority every year for each category of vehicles defined in (B) taking intoconsideration the contribution of that class to the total uninsured vehicles inthe country in the (n-2)th financial year = I
e) Obligation of the insurer to bemet in a financial year
O(n) =O(n-1) + { M(n-2) x V(n-2) x I}
* MTP Obligations in eachcategory for the 1st year (say for the FY 2020-21): Since obligations in termsof number of policies for the (n-1)th financial year (i.e in thiscase 2019-20) are not available, the actual MTP policies of the (n-2)thfinancial year may be considered for calculating the MTP obligations for theyear 2020-21.
B. The categories of Vehicles onwhich the above obligations shall be applicable are:
i) Two-wheelers,
ii) Private cars, and
iii) Others
C. For long term policies, theInsurers may take credit for
i) five/three/twoyears for two wheelers depending on the remaining term of the policy for whichit is in force and,
ii) three yearsfor private cars depending on the remaining term of the policy for which it isin force.
D. The existing exemptions may becontinued.
E. A Motor third Party Credit systemin lines with the Carbon credit system may be introduced for the first twoyears.
4. All the stakeholdersare requested to provide their feedback in the below format vide e-mail to janita@irdai.gov.in with a copy marked tosagar.bangal@irdai.gov.in latest by 8thMay, 2020.
Sr. No | Chapter | Comments$ |
1. | Chapter IV | |
| Recommendation 1 | |
| Recommendation 2 | |
| Recommendation 3 | |
| Recommendation 4 | |
| Recommendation 5 | |
2. | Chapter I* | |
3. | Chapter II* | |
4. | Chapter III* | |
*Mention section number of the Chapter
$If no comments are tobe made, please write ‘no comment’