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Detariffing of prices, cut in motor insurance loss contributing factors

Kamal Narang

Bullish performance: Mr M. Ramadoss, Chairman-cum-Managing Director,Oriental Insurance Company Ltd, at a press conference in New Delhi on Friday. —

Our Bureau

New Delhi, July 6 Oriental Insurance Company Ltd has reported a 75.15 per cent jump in net profit to Rs 497.27 crore for the financial year ended March 31, 2007 from Rs 283.91 crore in 2005-06 fiscal.

Addressing a press conference here on Friday, Mr M. Ramadoss, Chairman and Managing Director, said: “The rise in net profit is a result of detariffing of prices on insurance products which came into effect from January this year. The jump is also a result of the rise in business in certain sectors and cut in losses on motor insurance.”

The company has reported a reduction of 0.66 per cent in the overall net incurred claim ratio in 2006-07. compared to 2005-06. The net incurred claim ratio in motor own damage decreased from 48.36 per cent in 2005-06 to 46.16 per cent in 2006-07. The net incurred claim ratio in motor third party also fell from 180.11 per cent to 170.39 per cent. However, the claim ratio increased from 118.23 per cent to 119.4 per cent.

The gross premium collections for the year increased 11.4 per cent to Rs 4,020.78 crore as against Rs 3,609.77 crore in the previous fiscal. The net premium collection increased 15.2 per cent to Rs 2,879.73 crore compared with Rs 2,500.46 crore in 2005-06.

With cash surplus of around Rs 2,000 crore, the company plans to expand operations in West Asia.

Oriental Insurance, which had incurred a loss of Rs 235.48 crore in 2001-02, is making efforts to add new corporate clients to achieve a growth of over 10 per cent annually.

Mr Ramadoss said that among the new clients, the company gained a business of Rs 30 crore from Vedanta Group in 2006-07 and renewed contracts with NTPC for Rs 35 crore. It also provides insurance cover to Jet Airways, Air Sahara and Kingfisher.

“In the rural areas we did a business of around Rs 150 crore last fiscal. The company is targeting to enter rural health insurance in a big way through the vast district-level network. For this, we are in talks with NGOs, micro-financial institutions and Self-Help Groups for distribution of insurance products,” Mr Ramadoss said.

For the fiscal under review, the company’s solvency margin was at 2.17 per cent as against 1.97 per cent in 2005-06. The required solvency margin by the Insurance Regulatory and Development Authority is 1.5 per cent.

“The company also cut management expenses by Rs 97 crore and now complies with the Insurance Act provisions in this regard,” he said.

More Stories on : Financial Performance | General Insurance

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