Low incurred claim ratio indicates healthy growth prospects in general insurance business.
Incurred claim ratio of non-life insurance companies witnessed a marginal decline of 1% from 83% in FY 2012-13 to 82% in FY 2013-14, shows IRDA’s annual report.
Incurred claim ratio is net incurred claims to net premium. Simply put, it is claims received for the premium paid towards insurance policies in a year; hence, a low incurred ratio indicates healthy growth prospects in non-life business.
While private insurers have witnessed a decline of 2% in incurred claim ratio from 85% in FY 2012-13 to 83% in FY 2013-14, public general insurers saw flat growth in FY 2013-14.
Incurred claim ratio of non-life insurance in FY 2013-14
|
Segments |
Public Sector |
Private Sector |
Total |
|
Health |
106 |
88 |
101 |
|
Motor |
78 |
81 |
80 |
|
Fire |
80 |
55 |
77 |
|
Marine |
59 |
71 |
63 |
|
Others |
65 |
63 |
64 |
|
Total |
83 |
80 |
82 |
Source: IRDA
Among public insurers, National and United Insurance’s incurred claim ratio stood at 81% and 82% respectively. New India and Oriental recorded incurred claim ratio of 84% and 86% respectively in FY 2013-14.
Among private insurers, ICICI Lombard recorded an incurred claim ratio of 83% in FY 2013-14 against 84% in FY 2012-13. Also, Bajaj Allianz and Reliance posted incurred claim ratios of 72% and 92% respectively in previous fiscal.
Among various segments, health insurance continued to remain a cause of concern for general insurers since the segment recorded 101% incurred claim ratio in FY 2013-14, an increase of 6% compared to FY 2012-13. Such a high incurred ratio indicates that non-life insurers incurred hefty losses in this segment which affected their growth.
There was some respite for insurers in the motor insurance category. An increase in third party motor insurance premium tariff has helped non-life insurers limit their loss ratio to some extent in motor insurance segment. Motor insurance posted incurred claim ratio of 80% in FY 2013-14 as against 87% in FY 2012-13.
The profitability of general insurance firms went up last year. In FY 2013-14, the total net profit of the non-life insurance industry was Rs. 4,439 crore as against Rs. 3,282 crore in 2012-13. While public sector companies reported a combined net profit of Rs. 2,900 crore, their private counterparts reported a net profit of Rs.1,539 crore. To some extent, a decline in their incurred claim ratio has helped non-life insurers increase their profitability.