Introduction: The Insurance Regulatory and Development Authority of India (IRDAI) has issued a crucial notification, dated March 20, 2024, regarding the de-notification of several insurance tariffs. This move carries significant implications for the insurance sector in India, impacting insurers, consumers, and regulatory compliance. Understanding the details and consequences of this notification is paramount for all stakeholders involved.
Detailed Analysis
1. Background and Legal Authority: The notification draws its authority from Section 64 ULA of the Insurance Act, 1938, empowering the IRDAI to de-notify tariffs previously notified by the Tariff Advisory Committee. This action is in line with the evolving regulatory landscape and aims to foster greater flexibility and competition within the insurance market.
2. Previous Tariffs and Their De-notification: The notification outlines the de-notification of various tariffs, including fire insurance, motor insurance, engineering insurance, workmen’s compensation insurance, and marine insurance tariffs. Effective from April 1, 2024, these tariffs will no longer be in force.
3. Impact on Insurers and Consumers: The de-notification of tariffs signifies a shift towards a more liberalized insurance market. Insurers will now have greater autonomy in pricing and offering insurance products. However, this could also lead to increased competition and the need for insurers to differentiate themselves through innovative offerings and superior services. For consumers, this may result in a wider range of insurance products to choose from but could also necessitate a more discerning approach when selecting policies.
4. Regulatory Compliance and Transition: While the de-notification takes effect from April 1, 2024, insurers are obligated to continue offering existing tariff products until further notice. Additionally, the coverage of risks previously under the de-notified tariffs will now be subject to the IRDAI (Insurance Products) Regulations, 2024, and relevant guidelines specified by the Authority.
Conclusion: The IRDAI’s notification regarding the de-notification of insurance tariffs marks a significant milestone in the evolution of India’s insurance sector. This move towards deregulation aims to enhance market efficiency, promote innovation, and ultimately benefit both insurers and consumers. However, it also underscores the importance of regulatory compliance and strategic adaptation for all stakeholders. As the industry navigates these changes, proactive measures and informed decision-making will be essential to thrive in this evolving landscape.
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INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad, the 20th March, 2024
F. No.: IRDAI//Gen Insurance/Tariff/13/207/2024—In exercise of the powers conferred by sub section (1) of section 64 ULA of the Insurance Act, 1938, which provides for de-notification of all tariffs notified by the erstwhile Tariff Advisory Committee under the omitted section 64UC of the Act, and which continue to be in force.
1. It may be noted that in the year 2006, pursuant to withdrawal of tariffs by the Tariff Advisory Committee, the Insurance Regulatory and Development Authority of India (“Authority”) in exercise of the powers vested in it under clause (i) of sub section (2) of section 14 of the IRDA Act, 1999, issued notification Ref.034/IRDA/De-Tariff/Dec-06 dated 4th December, 2006 that the general regulations (other than those relating to premiums/ premium rating), terms, conditions, clauses, warranties, policy and endorsement wordings applicable to certain classes of business such as Fire, Engineering, Motor, Workmen’s Compensation and other classes of insurances under the relevant Tariffs shall continue to be followed until further orders.
2. Now, in exercise of the powers conferred by sub section (1) of Section 64 ULA of the Insurance Act, 1938, the Authority hereby notifies that all the following prevailing tariffs :
a) Fire Insurance Tariffs (other than All India Fire Tariff, 2001 which was already de-tariffed vide notification dated 28th December, 2020), namely
i. All India Fire Tariff
ii. Industrial All Risks Tariff
iii. Consequential Loss (Fire) Tariff
iv. Petro-chemical Tariff
v. List of Hazardous Goods
b) Motor, namely All India Motor Tariff
c) Engineering Insurance Tariffs, namely;
i. Contractors All Risk Insurance
ii. Contractors Plant and Machinery Insurance
iii. Machinery Breakdown Insurance
iv. Electronic Equipment Insurance
v. Civil Engineering Completed Risks Insurance
vi. Erection All Risk/Storage Cum Erection Insurance
vii. Loss of profit (MB & BLOP) Insurance
viii. Boiler and Pressure Vessels Insurance
ix. Deterioration of Stocks-(potato) Insurance
d) Miscellaneous, namely Workmen’s Compensation Insurance Tariffs.
e) Marine, namely Tea Tariff
stand entirely de-notified and no longer in force effective 01.04.2024.
3. It is however clarified that no insurer shall at any time withdraw or discourage the use of or decline to offer to any customer any of the tariff products which have been in existence prior to this notification.
4. It is hereby further notified that effective 01.04.2024, the coverage of risks coming within the scope of the de-notified tariffs stated in paragraph 2 above shall be subject to the IRDAI (Insurance Products) Regulations, 2024 and Master Circular (Guidelines) on products and procedures in general insurance business, as specified by the Authority.
DEBASISH PANDA, Chairperson
[ADVT.-III/4/Exty./85 1/2023-24]
