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Underwriting losses for general insurers jumped 33 per cent to ₹10,127 crore in 2014-15 from ₹7,641 crore in the previous year, according to Insurance Regulatory and Development Authority of India’s annual report.
Underwriting income is the difference between premiums collected on insurance policies by the insurer, and expenses incurred and claims paid out.
‘Pricing not adequate’KG Krishnamoorthy Rao, MD and CEO of Future Generali Insurance, said that general insurance industry is seeing high underwriting losses as the pricing in the market is not adequate and is unviable in various lines of business, such as group health, motor and fire, due to increasing competition among insurers.
IRDAI’s annual report said that specialised insurers (ECGC and Agricultural Insurance Company) collectively reported significant increase in underwriting losses in 2014-15, which stood at ₹428 crore as compared to underwriting profit of ₹95 crore in 2013-14.
Agricultural Insurance Company (AIC) reported an underwriting loss of ₹158 crore in 2014-15 against a profit of ₹32 crore in 2013-14. A senior official from AIC said the company saw significant losses in crop insurance due to cyclone Hudhud. The losses topped ₹1,500 crore in the year.
ECGC, which provides insurance cover to exporters, reported an underwriting loss of ₹291.91 crore against ₹62.62 crore underwriting profit in the previous year. While public sector insurers’ underwriting losses increased 22.57 per cent to ₹6,592 crore in 2014-15 from ₹5,379 crore in 2013-14, those of private sector insurers jumped 38 per cent to ₹2,495 crore from ₹1,810 crore.
Net incurred claims of non-life insurers collectively increased by 12 per cent to ₹55,232 crore in 2014-15 from ₹49,179 crore in 2013-14.
For both public and private sector insurers, the net incurred claims ratio was the highest in the health insurance space. For public sector insurers, the net incurred claims ratio in this segment increased to 109.97 per cent in 2014-15 as against 106.19 per cent in 2013-14.
However, private insurers saw a decline in their net incurred claims ratio in the health segment to 79.17 per cent in 2014-15 as against 87.62 per cent in the previous year.
Rao said that private insurers are focussing on retail health as most of the group health business has moved to public sector insurers as they are quoting low rates, which at times are even below the claims incurred.
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