Claims reported have been on a rise on the group health and motor third party segment.
The fourth quarter results of financial year 2017-18 by insurance companies are awaited with much of the focus on the underwriting performance of the general insurers. One crucial area to watch out for in this space will be the underwriting results in the motor and health insurance segments where they are bleeding heavily.
“Losses have been high in segments like group health and motor third party. For the industry as a whole, the loss ratios have been hovering around 110-120 percent and it could take at least three years to completely wipe them off,” said a senior executive of a private general insurance company.
On one hand, the annual premium increases in segments like motor and fire have not been commensurate with the claims being reported, on the other, discounts being doled out to retain clients has been a cause of concern.
Players like ICICI Lombard General Insurance and New India Assurance have reported losses in the motor business, even though the quantum of losses saw a drop in the third quarter compared to a year ago.
ICICI Lombard posted Rs 136.49 crore as underwriting loss in Q3 of FY18, though it dropped from Rs 265.79 crore posted in Q3 of FY17.
In the motor segment for Q3 of FY18, New India posted underwriting loss of Rs 203.36 crore while Rs 432.37 crore underwriting loss was posted in the health insurance segment including personal accident.
The government's Suraksha Bima Yojana is also a loss-making proposition for general insurers with losses exceeding 200 percent. This meant that for every Rs 100 collected as premiums, Rs 200 is paid-off as claims.
The underwriting losses of the general insurance companies increased to Rs 18840 crore in FY17 from Rs 14959 crore in the previous year. Theunderwriting losses increased by 25.94 percent over previous year.
Motor third party premiums are regulated by Insurance Regulatory and Development Authority of India (IRDAI) and revised on an annual basis.
The crop insurance which was initially a big driver of insurance and reinsurance premium for the sector is slowing down. Benign weather conditions in 2017 ensured that insurers were not hit with heavy claims in this space.
The general insurance market direct premium from April to February 2018 period stood at Rs 1.34 lakh crore, showing a growth of 17.7 percent.