The contract for developing the IT infrastructure for creation of a third-party insurance pool has been awarded to Tata Consultancy Services (TCS). Earlier, it was delayed due to some technical and tax issues. Now, it is scheduled to start from April 07.
The pool is a mechanism to merge all the premium mobilized and claims incurred by the industry. It also includes the distribution of the underwriting outcome among various companies in the ratio of their gross premium. The pool would end up with an underwriting loss, which would be shared among industry participants, thus is concerned to the loss-making third-party insurance of commercial insurance.
The pool came as a relief to public sector companies as their percentage of commercial vehicle businesses was disproportionately high compared to their own business. Because the private companies avoided stand-alone third party insurance of commercial vehicles. The pool was a mechanism where they could pass on some of the losses of the business they were forced to pick up to the private players.
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