It is said that fire premium is being discounted by public sector players up to 80 per cent to hold on to market share, is it true?

Not in all cases. May be for a few major corporates fire premiums are discounted up to 80 per cent. At present, fire premiums are discounted at 15 to 20 per cent on an average. Even after discounting, it has been seen that insurers are making money in this segment which may also imply that the earlier premiums rates (prior to detariffing) were not scientifically determined.

In the absence of any other differentiation each company is fighting only at price. So far, it has not come to dangerous level. If it continues for the next three or four years then there will be issues. Endless discounting cannot happen.

Public sector companies are yet to make underwriting profits?

In a detariffed scenario, reasonable profits (income from investments) can be made but when price levels go down to such an extent then companies cannot hold on to the price and still underwrite profits. Motor third party and health are segments where the claims ratios are still larger than premiums underwritten which public sector companies are trying to manage and bring to reasonable levels.

Has motor pool benefited public sector insurers?

Certainly, motor pool has helped public players to cut their losses arising from third party motor insurance. Motor third party was a bleeding segment for the public sector insurers. We had about 200 per cent of loss ratio. However, the motor pool has helped mitigate the burden as private insurers share a percentage of the losses according to the regulator’s mandate.

Talking about claims, health is the other portfolio where public sector companies are facing high claims. How are you managing them?

Two years ago, claims were at 120 per cent, last year we reduced it to 110 per cent and hope to bring down it below 100 per cent this year. In this regard, Oriental Insurance has appointed health managers who verify the claims. The introduction of sub-limits in health policies is also expected to bring down the claims level. (Public sector companies had introduced sub-limits that they will not pay above a certain limit under categorise such as hospitalisation expenses, aliment treatment and medication). Claims can be reduced further if hospitals are graded on the quality facilities offered and disease coded.

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