General insurers expect 10% growth in premium this year

With automobile sales recovering, the general insurance industry is expecting a 10 per cent growth in premium collection in the current financial year.

Motor insurance, which accounts for nearly half the business underwritten by non-life insurers, has picked up in the last few months, ensuring a faster overall growth.

In August 2009, non-life insurance companies registered an 11.11 per cent growth in gross premium collections to Rs 2,530.1 crore as against Rs 2,277.1 crore during the corresponding period last year. The domestic automobile sales went up by 22.4 per cent in August.

Premium collection in August also helped the general insurance sector register a 7.59 per cent growth in April-August 2009.

“Insurers are staying away from the bleeding health portfolio. This will help them reduce their underwriting losses. There are signals of economic revival and the industry will grow at 9-10 per cent this financial year,” said General Insurance Council’s Secretary General SL Mohan.

Within general insurers, the public sector players reported higher growth during April-August with their overall premium collection rising 9.9 per cent, while private players posted a 4.41 per cent rise in the category. Compared to last year, private players have seen a decline in growth as most of them are focusing on improving their bottom lines.

Higher claims have forced insurance companies to be selective in underwriting unprofitable business. While insurers are primarily focusing on two segments, health and motor, to boost growth, businesses such as group health insurance, where premiums are low but claims are high, have been shunned by many companies. In many cases, companies have cancelled policies in the middle of the term with a mandatory 30-day notice because of the adverse claims ratio.

Recently, the Insurance Regulatory and Development Authority Chairman J Hari Narayan had said that individual life products were faring better than group products.