Public insurers up mkt share in April renewals

Public sector insurance companies have managed to raise their market share further during the April renewals.

At a time when private players are trying to revamp their balance sheets, state-owned insurers are enjoying the advantage of their books, which reflect their better balance sheets and higher solvency margins.

“Companies have started focusing on the financial strength of an insurer before taking a cover,” United Insurance Chairman and Managing Director G Srinivasan said.

Public insurers have also changed their working methodology to acquire top line customers from their peers. In addition to offering higher discounts, these insurers are also focusing on the channels through which they conduct business.

 

Large companies, like NTPC, BPCL and ONGC, will renew their policy in May and June. But nearly 30 per cent of the companies renew their cover in April. Before that, the four public insurers –New India Assurance, National India Insurance, United India Insurance and Oriental Insurance – had a market share of 59.4 per cent up to February 2009, as against 60 per cent in the same period last year.

Earlier, the four public insurers had been consistently losing their market share to private insurers on a large scale. In 2007-08, they had lost a market share of over 5 per cent, compared with the previous year. The total premium collected by the public sector firms during the April-February period in the last financial year grew by 6 per cent to Rs 17,636 crore, compared with the corresponding period in 2007-08.

In order to further entrench themselves in the market in a detariffed situation, all insurers have been offering 80-90 per cent discounts in fire and engineering segment. But now private players have to underwrite risk cautiously as they will have to take losses on their books.

For instance, Iffco Tokio lost FMCG major Unilever to a consortium of companies, which included four public insurers and four other private players. Insurance brokers said that big private insurance companies, such as ICICI Lombard, Iffco Tokio and Bajaj Allianz, also lost a significant business during the April renewals.

“Public insurers have been very aggressive in the recent past and corporates have restored their faith in them,” said Optima Insurance Broker MD and CEO Rahul Agrawal.

“The discounts have stagnated at 2007-08 levels and the rates are not likely to plummet from here,” said Tata AIG General Insurance MD and CEO Gaurav Garg. The company has added new accounts such as Ranbaxy and Reliance Petrochemicals this year.

“We did not underwrite undue risk, which we even otherwise did not find lucrative,” said Future Generali non-life MD and CEO Deepak Sood.