The Hindu Business Line : Steep drop in marine hull insurance rates

SHIPPING companies are set to benefit from a steep drop in marine hull insurance rates. And they don't have to shop outside the country for competitive rates. Following the de-tariffing of the marine (hull) rates in April 2005, the premiums payable are down by 30 per cent and more.

Says Mr V. Ramakrishna, Managing Director, India Insure Risk Management Services, an insurance broker; "There has been a 30-40 per

cent drop in insurance premiums in this line. Competition has now brought it to a level where you can almost buy one cover and take another free."

Shipping companies are rather happy with the development.

Says, Mr Rajat Dutta, General Manager Planning, Great Eastern Shipping Company, the de-tariffing of the Marine Hull Insurance business is a positive development in line with global practices. As regards GE Shipping, "we are yet to witness the impact of the de-tariffing as our policies have yet not been due for renewal."

Mr V. Ramasaamy, General Manager, United India Insurance Company, confirmed that the premium rates had gone down sharply for marine (hull) business. When asked if such a drop would render the line unprofitable, Mr Ramasaamy said, "we take a call based on the individual ratios of various companies, and the experience that we have with those vessels. Where we have a good experience and our claims ratio is manageable, we are not averse to cutting rates to retain the customer."

United India Insurance has a marine hull portfolio of about Rs 50 crore.

Explaining the backdrop to the sharp cut in rates, Mr C.B. Murali, Chief Underwriting Officer, HDFC Chubb General Insurance Company, said, "companies generally want insurance as a package deal which covers everything from marine, property, to personal lines. They tend to see the property (fire) business that is tariffed as being very profitable to the insurance companies. They therefore expect insurance companies to cut rates - when there is a de-tariffed regime, as in marine hull segment now. This will become like the marine cargo business, which get very thinly and aggressively priced."

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