NEW DELHI: Research firm Crisil today projected underwriting
loses of the domestic general insurance companies at Rs 10,000 crore in the
2010-11 fiscal.
We estimate the industry's underwriting losses to
increase significantly to more than Rs 100 billion in 2010-11 from Rs 59 billion
in 2009-10, Crisil Ratings Director Pawan Agrawal said in a statement.
"This increase reflects weak underwriting performance, increase in
reserving requirements for each of the past four years on the TP motor insurance
pool, and wage revisions in public-sector insurance companies," Agrawal added.
The rating agency however, said that the recent hike in the third-party
(TP) motor insurance premiums by the insurance regulator IRDA would improve the
underwriting performance in 2011-12.
From today, third-party motor
insurance premiums have increased by 10 per cent for private cars and
two-wheelers and 68 per cent for goods and passenger vehicles.
"We view
the rate hike in the TP motor insurance as a step towards containing the general
insurance industry's mounting underwriting losses," Crisil Ratings Head Rupali
Shanker said.
The hike in the rates would improve the general insurance
industry's combined ratio to around 110 per cent in 2011-12, from an estimated
132 per cent in 2010-11.
A high combined ratio indicates weak
underwriting performance. A combined ratio of more than 100 per cent indicates
underwriting losses.
Third-party motor insurance is the only segment in
the general insurance category whose tariffs are regulated.
The TP motor
insurance segment is marked by unlimited liability and numerous instances of
inflated and fraudulent claims, Crisil said.
"This rate hike is
inadequate to cover the substantial losses incurred in this segment; premium
rates need to more than double from the 2010-11 levels for the industry to make
underwriting profits in this segment," the statement said.
Prudent
underwriting practices marked by risk-based pricing across key segments,
effective claims management, and lower operating expenses remain an imperative
to further improving the general insurance industry's overall underwriting
performance, it added.
loses of the domestic general insurance companies at Rs 10,000 crore in the
2010-11 fiscal.
We estimate the industry's underwriting losses to
increase significantly to more than Rs 100 billion in 2010-11 from Rs 59 billion
in 2009-10, Crisil Ratings Director Pawan Agrawal said in a statement.
"This increase reflects weak underwriting performance, increase in
reserving requirements for each of the past four years on the TP motor insurance
pool, and wage revisions in public-sector insurance companies," Agrawal added.
The rating agency however, said that the recent hike in the third-party
(TP) motor insurance premiums by the insurance regulator IRDA would improve the
underwriting performance in 2011-12.
From today, third-party motor
insurance premiums have increased by 10 per cent for private cars and
two-wheelers and 68 per cent for goods and passenger vehicles.
"We view
the rate hike in the TP motor insurance as a step towards containing the general
insurance industry's mounting underwriting losses," Crisil Ratings Head Rupali
Shanker said.
The hike in the rates would improve the general insurance
industry's combined ratio to around 110 per cent in 2011-12, from an estimated
132 per cent in 2010-11.
A high combined ratio indicates weak
underwriting performance. A combined ratio of more than 100 per cent indicates
underwriting losses.
Third-party motor insurance is the only segment in
the general insurance category whose tariffs are regulated.
The TP motor
insurance segment is marked by unlimited liability and numerous instances of
inflated and fraudulent claims, Crisil said.
"This rate hike is
inadequate to cover the substantial losses incurred in this segment; premium
rates need to more than double from the 2010-11 levels for the industry to make
underwriting profits in this segment," the statement said.
Prudent
underwriting practices marked by risk-based pricing across key segments,
effective claims management, and lower operating expenses remain an imperative
to further improving the general insurance industry's overall underwriting
performance, it added.
BY VIVEK KUMAR
PGDM -2 sem
PGDM -2 sem
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