Some insurers and insurance advisors feel that the loss ratios of motor insurance policies are still too high.
IRDA’s recent data shows that the non-life insurance companies have accumulated premium of Rs 29,777 crore from motor insurance policies in financial year 2012-13, a robust growth of 23 percent compared to Rs 24241 crores last year. However, some insurers and insurance advisors feel that the loss ratios of motor insurance policies are still very high. Experts attribute this to less than expected hike in premium, an unorganized automobile service market and burgeoning road accident rates.
Krishnamoorthy Rao, CEO, Future Generali General Insurance had earlier told Cafemutual “The gap between premium receipts and claims i.e. loss ratio are widening day by day. Currently, the loss ratio in motor insurance sector is around 100 percent. General Insurance Council had also recommended premium hike of 80 percent in motor insurance; however, IRDA has not approved it due to various constraints. By and large, losses will continue to exist in motor insurance segment.”
Gajendra Kothari from Etica Wealth Management said that the regulator should hike motor insurance premium to check the increasing difference between premium payment and claim settlement. He said that for last few years the incidents of road accident has increased.
Nisreen Mamaji from Moneyworks Financial Advisors said that the loss ratio of motor insurance sector has grown due to unorganized automobile service market (garages, spare parts vendors etc.) There is a huge possibility of nexus between surveyors and garage owners in insurance claim settlement.
IRDA data also shows that the premium collection in health insurance has increased by 16 percent as the insurance companies have collected nearly Rs 15341 crore till March 2013 against Rs 13211 crore in corresponding period last year. Except aviation insurance policies which recorded a marginal fall of 2 percent all other sectors have witnessed growth in insurance premium collection.
Liability insurance sector has registered a hike of 11 percent by collecting Rs 1357 crore. Kothari is very optimistic about the growth of liability insurance sector in India. He said that the liability insurance is one of the emerging products in non-life business because of growing incidents of legal claims.
Meanwhile, non-life insurance companies have also started this financial year with a healthy growth of 22 percent in the premium collection. General insurance premium collection had ended up with the growth of 19 percent last year.
27 non-life companies have accumulated Rs 7890 crore till April 2013 compared to 6467 crore in the corresponding period last year.
Except Star Health and Allied Insurance which has recorded a fall of 36 percent, all companies have registered positive growth in their premium collection.
Among private players, ICICI Lombard General Insurance has topped the chart by registering a growth of 21 percent with premium collection of Rs 818 crore while HDFC ERGO General occupied second position (earlier occupied by Bajaj Allianz) with premium collection of Rs 417 crore resulting in 53 percent growth.
Among the PSU insurers, New India Assurance collected the highest premium of Rs 1355 crore (15 percent growth) followed by United India that reported a premium income of Rs 1021 (12 percent hike).
IRDA data shows that the private non-life insurance companies have registered a robust growth of 31 percent with the collection of Rs 3644 crore while public sector general insurance companies rose by 15 percent with a collection of Rs 4245 crore.
Nisreen said that the hike in premium tariffs of health and motor insurance products resulted in a robust growth of non-life insurance business. She said that the increase insales of health insurance products has created a major difference in the growth of general insurance business. This is largely on the account of rising cost of medical treatment and increasing awareness about these products among the people, she added.
“Now, people have understood the significance of health insurance products in one’s life”, added Kothari.