Falling premiums fail to spur general insurance growth

The non-life insurance industry growth was slower at 13 per cent in the first five months of FY08 compared with 20.29 per cent a year ago, despite premium rates falling sharply in a free pricing regime.

The gross premium income of the general insurance industry, which was freed of pricing controls from the start of 2007, stood at Rs 11,780.49 crore against Rs 10,413.08 crore a year earlier.

The industry had grown by 20.29 per cent in April-August 2006 with a gross premium of Rs 8,668.7 crore. LOT TO COVER Gross premium up to  August (Rs crore) Insurer August April-August 2006-07 2007-08 2006-07 2007-08 Royal Sundaram 44.79 47.80 245.11 267.94 Tata-AIG 62.37 61.01 343.49 359.16 Reliance General 59.34 154.73 273.54 807.95 IFFCO-Tokio 82.24 61.51 570.86 458.51 ICICI-lombard 248.06 301.74 1284.52 1463.75 Bajaj Allianz 125.41 186.76 713.57 946.50 HDFC CHUBB 15.74 26.78 76.52 97.69 Cholamandalam 23.78 40.74 128.08 226.43 New India 343.47 350.82 2076.80 2194.17 National 272.61 295.38 1542.33 1666.71 United India 260.02 293.11 1488.98 1579.36 Oriental 283.60 288.54 1669.28 1712.32

Insurance companies in order to withhold existing clients and grab new customers have been competing with each other on price.

The premium rates for fire and engineering policies have dropped by more than 30 per cent, while discounts offered is over 20 per cent for motor own damage cover in case of private cars.

The eight private players collected a gross premium of Rs 4,627.93 crore, a growth of 27 per cent against a gross premium of Rs 3635.69 crore up to the month of August last year.

The four public sector players — New India Assurance, Oriental Insurance, National Insurance and United India Insurance — showed a marginal growth of 5.54 per cent at Rs 7152.56 crore compared with Rs 6777.39 crore in the year-ago period.

In August this year, the non-life industry recorded a total gross premium of Rs 2,108.92 crore — the private sector cornered Rs 881 crore and the public sector accounted for the balance Rs 1,227 crore.

The growth rates was 15 per cent for the total industry, 33 per cent for the private players and 5 per cent for state-owned general insurers in August this year.

The largest private insurer, ICICI Lombard General Insurance, grew by 14 per cent with a premium of Rs 1,464 against a premium of Rs 1284.52 crore up to August in 2006-07.

Reliance General Insurance recorded the highest growth of 195 per cent among industry players by underwriting a gross premium to Rs 808 crore.

Cholamandalam grew by 77 per cent, Bajaj Allianz 33 per cent, Tata AIG grew marginally by 5 per cent and Royal Sundaram by 9 per cent. Iffco Tokio General insurance continued growth declined by 20 per cent.

The private players had a market share of 39 per cent while the public sector players had the remaining 61 per cent as per the data up to the month of August.

Comments

[shailesh]

the decline in growth rate is a clear indicator of lack of credibility of the insurers in the eyes of a common man. none of the companies have done their bit in creating right kind of awareness in public through their deeds. unless the printed rules are not translated in easy to understand language and properly communicated to the insured, we can not expect this sector to increase penetration further. it is sad that IRDA also has neglected this area and is not supporting the intermediaries especially surveyors, who are the backbone of the insurance transaction. if surveyors problems are dealt with in true spirit by the Authority, it can do wonders and through their activity right kind of awareness can be created effortlessly. but who wants to listen to theri grievances. one side irda is crushing them under the pressure of in-house employment of surveyors and other side it talks of common code of conduct.,what a contradiction. there is complete lack of sincerity on part of insurance companies as well as IRDA.
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