The Hindu Business Line : General insurance premium rates may not go up

Chennai, April 1 Early trends in premium renewals for the current year (2009-10) indicate no increase in premium rates. This is in contrast with the general belief in the insurance industry that the rates had bottomed out and a rise is on the cards.

Industry sources said that companies are agreeing to pay only the same rates as last year, though ‘terrorism cover’ rates have gone up between 30 and 40 per cent.

On the other hand, renewal premiums for fire and engineering portfolios have gone down further. Those of health and marine segments show a slight northward movement.

This to the utter disappointment of general insurers who felt that premiums were at rock bottom and a revision upwards was required. This year is the “worst” in terms of renewal premiums, says Mr Gopalarathnam, Managing Director, Cholamanadalam MS General Insurance.

Mr T.A. Ramalingam, Head of Underwriting, Bajaj Allianz General Insurance, said that fire premiums have fallen 80 per cent this year compared with 60 per cent last year. Premiums are today down 80 per cent from what they were when the rates were controlled by the insurance regulator.

Mr Sandeep Bakshi, Managing Director and CEO, ICICI Lombard, said that there fire premiums have reached the bottom and need to be recalibrated.

The reason premiums have not surged is attributed to severe competition among insurance players. There are 21 players in the general insurance industry. Just three years ago, there were just eight.

But notwithstanding competition, “no further reduction in rates is possible”, according to Mr V. Ramaswamy, Chairman and Managing Director, National Insurance.

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