The Hindu Business Line : Private insurers improve market share to 40%

Bangalore, Jan. 16 Private sector general insurance companies improved their market share to 40 per cent, powered by the once shunned motor insurance business for the first eight months of the current financial year.

According to the data released by the Insurance Regulatory and Development Authority (IRDA), private sector insurers’ gross premium accretions during the period was Rs 7,352.84 crore, a growth of 26.5 per cent over the corresponding period of the last financial year. Public sector insurers’ premium accretions for the same period were Rs 11,156.19 crore, or a growth of 3.81 per cent. The entire industry grew by only 11.77 per cent, during the period, implying that the bulk of the growth was cornered by the private sector companies.

Motor pool helps

The private sector’s growth was largely driven by the retail sector, particular motor risk business. Motor vehicles risk covers became attractive after the formation of the third party pool since the beginning of the financial year. Under the arrangement, all third party liabilities in motor insurances were transferred to a separate entity, India Motor Insurance Pool, since the beginning of the year. The arrangement allowed the individual companies to earn a 10 per cent commission and at the same time retain the low claims, own damage component of motor risks business.

Industry sources said that the bulk of the private sector, faced with cut-throat competition and falling tariffs are shifting to retail business. Retail business, though small ticket, the sources said, were highly profitable in view of the low claims ratios. Retail claims are just about 40 per cent, the sources said. This allowed for high retentions and consequently implied high profits.

Besides, retail lines, in view of the small size also mitigated the need for reinsurance support as in the case of big ticket business, such as fire and engineering risks. The high profits from retail lines also allowed the private sector insurers to improve their capital for sustaining future growth, the sources added.

Among the private sector companies, ICICI Lombard Insurance remained on top of the league with premium accretions of Rs 2,348.10 crore during the April-November period, followed by Bajaj Allianz General Insurance Company Ltd, with Rs 1,515.52 crore. However, Reliance General Insurance Company Limited showed the highest growth during the period at 152.54 per cent, making it third largest private sector entity.

New India leads

In the overall line-up public sector general insurer, New India Assurance Company remained on top with premium accretions of Rs 3,520.36 crore, up 6.16 per cent over the corresponding period of last year. But Oriental Insurance recorded a negative growth of 1.89 per cent during the period with premium accretions of Rs 2,600.49 crore. However, traditionally, PSU insurers’ growth picks up during the third and fourth quarters of the year, the sources said.

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