Declining auto sales and a slowdown in the economy has taken a toll on the general insurance industry of the country. The gross premium underwritten in October grew by 3.1 per cent against 10.7 per cent in September. The gross premium of the non-life insurers stood at Rs 2,456.64 crore (Rs 24.56 billion) in April-October against Rs 2,383.28 crore (Rs 23.83 billion) in the corresponding period last year.
Private insurers reported a 3.7 per cent growth in premium collection to Rs 1,019 crore (Rs 10.19 billion) whereas the four public insurers, which account for more than 60 per cent of the market share, managed growth of a mere 2.7 per cent to Rs 1,437 crore (Rs 14.37 billion) in gross premium.
"The motor insurance business has been hit by the slump in motor sales in the last two months. Companies are also postponing their expansion plans, so, there is a drop in the new fire-and-engineering premium," said V Ramasaamy, chairman and managing director, National Insurance Company. The gross premium of the public insurer grew 7.27 per cent to Rs 344.67 crore (Rs 3.44 billion) against 20.27 per cent in September.
However, he said the company aims to reach Rs 4,500 crore (Rs 45 billion) in gross premium by the end of this financial year.
With the slew of measures taken by the government, insurers are hoping automobile sales will pick up.
Motor insurance accounts for 45 per cent of the total premium in the general insurance sector. It is followed by infrastructure where projects are currently being kept on hold.
Global meltdown: Complete coverageThe country's largest private insurer ICICI [Get Quote] Lombard recorded a dip of 6.67 per cent. The premium collection of this non-life insurer fell to Rs 316.01 crore (Rs 3.16 billion) as against Rs 337.54 crore (Rs 3.37 billion) in September.
"Motor, group health and fire premium needs to go up. Insurers have started taking a call on the group health insurance segment as it has become a loss-making portfolio," said Sandeep Bakshi chief executive officer, ICICI Lombard.
Rahul Agrawal, CEO Optima Insurance Brokers, said, "Heavy discount in premium to expand the base is also responsible for the drop in the gross collection." Due to detariffing, the competition to give more discounts has gone up. Discount in motor premium has gone up to 25 per cent from 20 per cent last year. In infrastructure, it varies from 60-85 per cent.
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