Most private insurance players have fallen in line with their public sector counterparts in settling motor claims.
Some players, like HDFC Chubb, have decided to match the rates set by the public sector in order to avoid problems to their customers.
Others like, Tata AIG and Bajaj Allianz, have decided to offer a flat rate depending upon the car model, disregarding the degree of submergence of the vehicle.
Yet others, like ICICI Lombard, continue with their pre-existing labour charges agreed upon with respective dealers. These are lower than the rates offered by the public sector general insurance companies, but higher than those offered by most private insurance players.
Distortions have always existed in the market between insurance companies and service stations in respect of the claim settlements. The issue is creating waves now on account of the magnitude of devastation following the Mumbai floods.
Under pressure to settle claims at the earliest, public sector insurance companies, led by the New India Assurance Company, chose to meet dealers' demand and hasten the settlement of claims.
Private sector counterparts, fearing repercussions of high claims, had chosen not to follow suit. However, with work getting prioritised on account of who pays the highest, private insurers have also been forced to toe the line, said a senior insurance company official heading claims. "Today we do not wish our customers to suffer," he added.
Some of the private insurers have, however, decided to follow a flat rate when settling claims. Senior insurance officials said labour charges on a Maruti 800 have been decided at Rs 2,500 immaterial of the extent of damage to the vehicle.
This is as opposed to public sector insurers having agreed labour charges of Rs 9,000 in the case of a fully submerged Maruti 800, and 60 per cent of the same, amounting to Rs 5,400, where the water level has touched the dash board. Labour charges fall to less than Rs 3,000 in the event where the water level has reached the seat level.
According to some dealers, some of the flat rates settled with insurance companies on labour charges stand at Rs 8,000 for Tata Motors' Indigo, Rs 9,000 for the Ford Ikon and the Hyundai Accent.
"When we had tied up for cashless motor claims, we had a pre-existing understanding with dealers, which did not allow for any adhoc block amount, but depended upon the nature of damage to the vehicle," said senior officials at ICICI Lombard General Insurance Company.
The existing agreement for instance, puts labour charges for a fully submerged Maruti 800 at Rs 4,000-5,000.
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