"The goverment is contemplating whether to bring the premium of third-party motor premium down or not," Kanwar said. The finance ministry had allowed the Tariff Advisory Committee (TAC) to effect a massive 200-700 per cent hike in this category over three years to balance the claim outflow on account of third-party claim.

It was calculated that the industry was suffering over Rs 1,200-crore net loss every year as the claim ratio was pegged over 140 per cent each year.

However, All India Motor & Transporter Congress, an apex motorist organisation, had strongly opposed the move. The congress had pleaded that such a massive hike was unjustified as general insurance companies had not calculated their loss on the basis of actual-loss stastics in this segment.

According tothe organisation, the companies' provisoning against third-party motor claim each year is highly inflated as the actual payment is quite less. Besides, the companies are investing premiums regularly and are booking massive income on this.

"The investment income is not being adjusted against the interest outflow of the provision made against third-party motor claim each year," a congress representative had argued before the TAC.

During 1993-94, the General Insurance Corporation had made it mandatory for companies to include the interest rate while making provisions against third-party claim, even with retrospective effect.

As most of the claims remain sub-judice for long before settlement, the companies were forced to undertake huge provisioning including the payment of interest rate, thereby expanding their loss each year.

TAC in its last three meetings with the congress had assured the body that it would find out an equitable solution to its grievances.

Company records 12% growth inpremium

The New India Assurance Company, the largest GIC subsidiary, has recorded a 12 per cent growth in premium during the first five months of this financial year against the targeted 17 per cent, said Kanwar.

The company is the only GIC outfit to book a Rs 57.13-crore underwriting profit during 1997-98, he said.

The deceleration in growth rate was due to the sluggish growth of the economy, recession in automobile segment, slowdown in international trade and delay in setting up of mega projects, he added.

The company is making an effort to expand its non-conventional business to sustain the growth rate, he said.

The company has targeted a 17 per cent growth during 1998-99 in gross direct-premium income to Rs 2,867 crore from Rs 2,688.57 crore in the previous year.

During 1997-98, the company's net profit had gone up from Rs 196.69 crore to Rs 470.94 crore, while the investment income shot up from Rs 456.35 crore to Rs 573.90 crore.

The company's net gross direct-premium income fromdomestic operations increased to Rs 2,433.73 crore from Rs 2,174.36 crore in 1996-97 and the company earned a Rs 57-crore underwriting profit, aginst an underwriting loss of Rs 78.95 crore in the previous year.

Overseas operations showed a Rs 14.97-crore profit on a net premium of Rs 253.86 crore during the year.