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January 24, 2001
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IRDA ask LPA to reposition as risk manager, rope in new cos

Insurance Regulatory and Development Authority chairman N Rangachary on Wednesday asked the Loss Prevention Association of India (LPA), formed by General Insurance Corporation and its four arms, to reposition and convert itself into a risk management organisation.

"LPA has to reposition itself. The association must in due course convert itself into a risk management and risk analyser," Rangachary said at conference on 'Fire safety technology in the new millennium' organised by LPA.

Although the four subsidiaries have been recently delinked from the parent company GIC, which is to be converted into the Indian Reinsurer, LPA continues to be under its fold.

"I would seriously suggest that both GIC and four state-owned general insurance companies, and the new companies get together and try to plan for some informed and educative measure in risk management loss prevention," he said.

The inclusion of new companies would ensure LPA to secure a "much stronger position," the IRDA chief said.

With the entry of new players, there has been increasing pressure on the existing companies to price their products on competitive lines, Rangachary admitted, but said pricing of new products should be determined by the market demand and supply.

Pointing to the decrease in fire tariff, he said this has put pressure on insurance companies as claims ratios are strictly being checked by the regulator.

"There is an urgent need (for LPA's activities) to be market relevant. If one has to remain competitive then one has to live up by the pressure placed in its business," he asserted.

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