The Hindu Business Line : Free pricing: Non-life insurers see no major impact on growth

Kolkata May 9 The non-life insurance market is expected to recover and settle down within a reasonable time, weathering the initial impact of de-tariffing, chiefs of public-sector insurance companies said here on Wednesday.The market in future will see an advent of differential policy terms, courtesy pressure on insurers to design suitable products for different sets of customers. In such a situation, the focus of the insurance industry will be on retail sales, including through newer channels, especially the Internet.

There will be an exponential growth in health covers even as insurance companies prepare to deliver products and services to semi-urban markets in a more effective manner.

Mr M. Ramadoss, Chairman and Managing Director, Oriental Insurance Company Ltd, said the recent de-tariffing has had an impact on fire and engineering premium rates, which have fallen notably. Motor own damage premium, however, is fairly stable, while motor third party has scaled up substantially.

He was addressing a meeting organised by FICCI here.There is now easier availability of services for all vehicles, a trend that has now emerged firmly. This, it is felt, has been perhaps the greatest advantage of de-tariffing.

"From the initial days of de-tariffing, the industry's growth has not been terribly impacted. For fire, the overall scenario is stagnant. However, engineering has grown well in the past three months or so, courtesy more projects that have come up. On the motor own damage front, the overall growth has been about 10 per cent, with lots of discounts going to private vehicles."

Mr V. Ramasaamy, Chairman and Managing Director, National Insurance Co, agreed that a large-scale price war has not erupted on the non-life insurance turf — despite serious apprehensions.

Pricing, he added, will depend on a range of factors, including costs and management expenses.

Mr Samir Bali, Director, Tax Advisory Services, Ernst & Young Pvt Ltd, referred to a study (conducted with FICCI and IRDA) to assess stakeholders' expectations with regard to detariffing. It revealed that there was a general appreciation for a staggered approach. A phased introduction to pricing was also appreciated.

The most critical elements for the industry's growth will be use of modern technology, underwriting processes and their on-going supervision, training of insurance company executives and product innovation.

Over the next 12 months and more, there has to be an emphasis on data quality and IT systems by private and public sector insurers, Mr Bali felt.