Bitter-sweet story for general insurers

While general insurance companies in India have been posting net profits, they have seen a worsening condition as far as underwriting profits are concerned.

According to data from the General Insurance Council, all insurance companies in the non-life industry (except Star Health Insurance) are posting underwriting losses. This comes at a time when state-owned general insurance companies are on the road to be listed on Indian stock exchanges.

A combined ratio below 100 per cent indicates an insurer is profitable. This ratio is the sum of incurred losses and operating expenses, measured as a percentage of earned premium. With group health, third-party as well as segments like fire and engineering seeing heavy claims and premiums not being commensurate with these claims, losses have increased for the industry as a whole. Industry executives said that in the motor segment, combined ratios have almost crossed 150 per cent.

 

While the insurance industry as a whole is capital-intensive and the increase in the foreign direct investment (FDI) limit to 49 per cent from 26 per cent, inflow into the industry has been limited. Data show there has been only 33.4 per cent increase in FDI inflow (par value). On the other hand, several non-life companies are also posting operating losses.