New Delhi, Nov 27: The Tariff Advisory Committee (TAC) of the General Insurance Corpration (GIC) recommended to the government that the motor insurance premia hike can be reduced by 25-50 per cent. This is for the first time TAC is revising its recommendation.

The hike had led to a crippling truckers strike earlier this year. According to insurance sources, the reduction of hike will be the most in the goods carrier segments. The hike for the private goods carriers was about 799 per cent which was to be implemented over three years. The hike for private cars was 264 per cent and for two wheelers 215 per cent. The reduction in hikes in these categories will be the much less.

But the implementation of this reduction will not be possible until the Calcutta high court order on the initial hike is delivered. In April, the mini-bus operators union of Calcutta had challenged the TAC decision to hike the motor premia.

In response to this, the single judge bench of Justice Satyabrata Sinha had struck down the notification of TAC on motor insurance premia hike. Justice Sinha had also asked that the TAC itself be reconstituted. He agreed with the objection of the operators union that the chairman of the TAC and the chairman of GIC should not be the same person.

TAC appealed against this order to a division bench who stayed the reconstitution of the statutory body. A final verdict on the petition is still awaited. It is only after this that the GIC and its subsidiaries can reduce the hikes as suggested by TAC.

While the truckers unions across the country have been opposing the hike, insurance industry has justified and welcomed the increases. GIC and its four subsidiaries have incurred losses of Rs 1500 crore in the last three years on motor insurance alone. Low tariff is the main reason for this loss. When in 1989-90, GIC had asked for a 60 per cent hike in tariff, only 30 per cent was allowed.

The Standing Committee on Finance of the Parliament had criticised the TAC for not increasing the tariffs. ``TAC has completely failed in performing its assigned task of revision of tariff which should have been done more regularly and more frequently,'' it said. The committee came down heavily on the government too, ``The government is equally responsible as they have been a mute spectator all along during these three years to the huge losses incurred by GIC annually.''

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.