"This year, we will have to provide around Rs.600 crore on account of motor third party losses. These are basically the carry forward losses we incurred till 2011-12," A.V. Girija Kumar, director and general manager of the public sector non-life insurer, told reporters here.
Girija Kumar said the general insurer had made provisions worth Rs.850 crore in the last two fiscals on the same account.
The company would also have to make provision for Rs.550 crore-Rs.600 crore in the next financial year to cover itself fully for the losses incurred, he said.
Its average loss ratio under third party commercial motor policies stands at around 150 percent.
Sector regulator Insurance Regulatory and Development Authority (IRDA) had dismantled motor third party pool last year and the accumulated losses were shared among general insurance companies.
The regulator had asked insurers to provide for their losses either at one go or over a period of three years.
Following the dismantling of the pool, IRDA set up a declined risk pool system under which the insurers would have the right to refuse to insure a vehicle, which would then be insured from a pool shared by insurers.
Girija Kumar said the company was however confident of clocking 20 percent business growth this fiscal, despite the stiff provisions.
The general insurer had registered a net profit of Rs.325 crore in the last financial year.
The company was mulling to increase premiums for individual health insurance policies by 20 percent to 25 percent, Girija Kumar said.
