Business Daily from THE HINDU group of publications
Tuesday, Aug 29, 2006
Business Daily from THE HINDU group of publications Tuesday, Aug 29, 2006 |
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Money & Banking
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General Insurance New India Assurance underwriting profit dips Our Bureau
MR B. CHAKRABARTI, CMD, New India Assurance Co. Ltd (left), and Mr A.K. Sekar, General Manager, at a press conference in Mumbai on Monday. — Shashi Ashiwal
Mumbai , Aug. 28 New India Assurance has taken a hit of Rs 480 crore following the Mumbai floods last year. Mr B. Chakrabarti, CMD, New India Assurance, said the Mumbai flood was one of the reasons for a 84.5-per cent dip in underwriting profit to Rs 36.03 crore in 2005-06 against Rs 232.78 crore last year. Mr Chakrabarti said the drop in underwriting profits follows a rise in the retention of premium while ceding less to reinsurers. "Since we have increased retention, one or two major losses like the Mumbai floods can cause the underwriting profit to fall. On the other hand, we make a saving in the payment of reinsurance premium, " Mr Chakrabarti said. This year, New India Assurance has received 8,500 claims due to the Surat floods, which would lead to an estimated loss of Rs 150 crore. The general insurance industry has so far received 17,000 claims, which could lead to an estimated loss of Rs 1,000 crore, Mr Chakrabarti said.
Third party claims
New India Assurance's high exposure to third party claims on its motor portfolio was another factor for the lower underwriting numbers in 2005-06. "We have increased the reserves for incurred but not reported losses from the motor portfolio by around Rs 300 crore. Besides, the underwriting result also reflects the wage revision of 13.5 per cent last year," the Chairman said. New India Assurance, which has a market share of 22.83 per cent, reported a net profit of Rs 716.38 crore in 2005-06, against Rs 402.23 crore in the previous year. The company registered gross direct global premium of Rs 5,675.55 crore, against Rs 5,103 crore in the previous year. New India has increased its stake in the Nigerian insurance venture styled Prestige Assurance from 47 per cent to 65 per cent. The company's gross premium income from the Indian operations was Rs 4,791.50 crore in 2005-06, against Rs 4,210.81 crore in 2004-05. The investment income has jumped to Rs 2,011 crore from Rs 1,450 crore in the previous year, on the back of an equity sale. The motor insurance segment brought in premium of around Rs 2,200 crore but the average claims ratio was high at 181 per cent, mainly due to the losses in the commercial vehicles segment. Health insurance raked in Rs 700 crore in premium and the average claims ratio was around 110 per cent. Mr Chakrabarti said the average claims ratio was high as the company was insuring a significant number of people from the 45-plus age group. The company plans to introduce separate health insurance products to cover the higher, middle and lower income brackets as well as those from semi-urban and rural areas. The policies will have sub-limits for medicines and room-rent within the total sum-assured, Mr Chakrabarti added. "We are trying to target the youth to sell health insurance products so that we have a more balanced portfolio. New India Assurance is looking for a cost-effective distribution channel to market these products," he added.
More Stories on : General Insurance | Natural Calamities
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