Business Daily from THE HINDU group of publications
Thursday, Jul 06, 2006
Business Daily from THE HINDU group of publications Thursday, Jul 06, 2006 |
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Money & Banking
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General Insurance Info-Tech - Software
Our Bureau
Bangalore , July 5 National Insurance Company of India Ltd (NICL) has retained the Infosys Technologies account for this year in the face of intense competition from other public and private sector insurers. This is the 10th year in succession that NICL has bagged the prestigious account. NICL officials said that the company paid an estimated premium of Rs 16 crore, inclusive of service tax, for the current year against Rs 10 crore last year. The sum assured this year was Rs 5,300 crore against Rs 4,600 crore last year. The premium included some liability components such as group medical cover for an estimated 52,000 employees and an additional terrorism risk policy.
Co-insurer
This year NICL has a co-insurer for risk cover - ICICI Lombard Insurance Company Ltd. The policy would be shared on a 75:25 basis, the NICL officials said. Sources said that close to 70 per cent of the company's assets covered are in Bangalore. The risk coverage of the remaining assets in other parts of the country is minimal, they added. NIC insurers have taken full reinsurance support for the cover to restrict their own liabilities. Under the current guidelines of the Insurance Regulatory and Development Authority (IRDA), 20 per cent of the reinsurance is to be ceded to the national reinsurer, General Insurance Corporation (GIC). Global reinsurers have covered the remaining component of the asset risk. Infosys was able to obtain a highly competitive premium for the large sum assured, the sources said.
Cross-subsidisation
The premium paid by Infosys included cover for both business interruption as well for group medical claims. This was despite the fact that Infosys had a high claims ratio on the group medical cover (in excess of 100 per cent). This was in line with the trend in mediclaim covers, where claims ratio remain on the high side. The high ratios imply that the medical covers are actually loss-making for the insurers. But the losses on this count are cross-subsidised by the asset cover. According to the sources, in asset and business interruption cover, Infosys has an impeccable record - zero claims. As a result, despite the cross-subsidisation, the Infosys account is still highly profitable for the general insurers in the country.
Related Stories: More Stories on : General Insurance | Software | Infosys Technologies Ltd
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