The Hindu Business Line : Non-life premiums up 26 pc in January

Mumbai March 8 The growth of the non-life sector is on track and has not been blighted by the free-pricing regime, which came into being on January 1, say non-life insurers. Earlier, fire, engineering and motor lines were under tariff or administered rates.

According to IRDA data, the gross premium underwritten by non-life insurers in January has registered a growth of 25.7 per cent to Rs 2,202 crore against Rs 1,751 crore in the previous year.

In the first ten months of the fiscal, the premium jumped by 23 per cent from Rs 17,530 crore to Rs 20,378 crore.

Mr KN. Bhandari, Secretary General, General Insurance Council of India, said the free-pricing regime has led to a reduction in cross-subsidisation between tariffed and non-tariffed portfolios. Customers are now opting for larger covers with the drop in premium. "Contrary to the prophets who had spelt doom, the non-life industry is doing well. Customers are now making use of their discounts by going in for a larger insurance policy paying the same premium," said Mr Bhandari.

Mr Bhandari estimates the non-life industry to see a sustained growth of 18-20 per cent at the end of the fiscal.

Since January 1, premia on fire and engineering have dropped by 25-40 per cent. While motor insurance policies covering own damage have benefited from a 20 per cent discount, there has been an increase in rates on third party insurance of vehicles.

Mr Bimalendu Chakrabarti, Chairman and Managing Director, New India Assurance, said business had not been affected as the premium on motor insurance has been rationalised. "Motor insurance accounts for 40 per cent of the portfolio as well as the maximum losses. The increase in third party premium as well as the effective management of a motor pool to restrict losses will help the bottomline of companies," said Mr Chakrabarti.

He also said the cross-subsidisation of health insurance portfolio by the more lucrative fire insurance of corporates may get reduced.

The third party motor insurance pool that has been operationalised since January 1 will handle around Rs 3,000 crore of premium and service 4-5 crore policies.

The General Insurance Council has also set up a task force to crack down on the large number of vehicles, which remain uninsured despite third party motor insurance being compulsory.

Although 78 million vehicles have been registered, only 40 million motor insurance policies have been issued, Mr Bhandari said.

The General Insurance Council now plans to set up an online system with Regional Transport Offices, where insurance companies will provide RTOs with data on motor policies.