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Non-life insurance firms to lose Rs 1,800cr By OUR CORRESPONDENT
MUMBAI
Jan. 11: The Indian non-life insurance sector is expected to incur losses of Rs 1,800 crore in this fiscal in group health and cargo policies.
Mr Sandeep Bakhshi, managing director and CEO of ICICI Lombard General Insurance Company Ltd said: "The premiums of fire and engineering which were high during the tariff regime have fallen significantly. They were cross-subsidising the losses in group health and cargo segment. After de-tariffing which came in last January, premiums have declined in fire and engineering and non-life insurers will have to bare the huge losses on account of the group health and cargo segment." Mr Bakhshi was addressing a conference organised by Unison Insurance Broking Services in Mumbai on the week-end.
He said: "Non-life insurance companies will have to restructure and re-price the group health and cargo policies by increasing the premiums to reduce the losses.
The other issue which is pinching the Indian non-life insurance segment, is the high claim ratio with respect to the premium collection.
Indian non-life insurers every year collects about $7 billion and settles 40 lakh claims. In the developed world the number of claims is far less than in India.
For instance, in Canada non-life insurers collect $ 50 billion as premium and they need to settle about 20 lakh claims every year. It suggests that in India attritional losses are borne by the insurer, which actually should be borne by the insured."
Mr G. Srinivasan, chairman and managing director of United India Insurance Company Limited said: "The premium collection has been gradually declining in the last 12 to 18 months. In the first half of fiscal 2008-09 the premium collection in fire policies have declined by 8.3 per cent compared to the same period last year. As corporates have halted their expansion plans the engineering segment has witnessed a 13.5 per cent decline in premium collection in the first half of fiscal 2008-09 compared to the same period last year."
Business in the motor insurance grew by 19.9 per cent in the fiscal 2007-08, but in the first half of this fiscal it has grown by 10.5 per cent only.
Mr Srinivasan further said: "As the stock market has collapsed by about 60 per cent, the expected profits from the investments in the stocks by non-life insurers have gone down significantly. Shrinkage of profit margins due to declining premium collection and loss in returns on investments in stocks have become crucial problems for our industry."
Echoing the decline,
Mr Ronnie Variava, executive chairman of Unison Insurance Broking Services said: "The premium on the corporates policies i.e fire and property has declined by about 60 to 80 per cent and the premium on motor policies has declined by about 30 per cent."