"The government 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 statistics in this segment.

Accordingto the organisation, the companies' provisioning 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.