SMALL FIRMS COULD BE HIT UNDER NEW INSURANCE REGIME

Small and medium companies are likely to be the worst affected in a regime where there are no controls on premium charged on general insurance risks. The proposed lifting of controls on premium rates is expected to bring to an end the prevalent practice of cross-subsidising tariff-free group health insurance and marine risks against profitable portfolios like fire and engineering covers, premium rates for which are tariff based. General insurance would move to estimating premium rates based on assessment of risks on a standalone basis from a client portfolio basis.