Motor insurance commands a large slice of the miscellaneous insurance business in India. Unfortunately it also has the highest claim ratio due to Third Party Liability, predominately due to Commercial Vehicles.
Arising out of the need to see the development of the insurance market in India and ensuring that policyholder rights were not compromised by such developments, the IRDA mandated the creation of a Motor Third Party Pool in December 2006. The pool is applicable only for Commercial Vehicles wherein an arrangement is made to share losses in proportion to the market share of the insurers.
The pooling of business among all insurers will be achieved through a multilateral reinsurance arrangement between the underwriting insurer and all the other registered insurers carrying on general insurance business (including motor insurance business) and general insurance reinsurers.
Underwriting offices of insurers shall follow the underwriting instructions of the General Insurance Council of India in the matter of procedures for underwriting and documentation and accounting and settlement of balances.
There will be no agency commission or brokerage payable in respect of motor third party insurance business.
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