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The slowing economic environment has affected the commercial lines of business (fire, property and health) of general insurers with most keen on bringing down their premium costs.
A senior official from a public sector general insurance company said that despite discounts being as high as 70-80 per cent in commercial lines of business, due to severe competition among insurers, there is still undercutting which has resulted in a decline in premium rates.
According to industry officials, premium rates in the segment have declined by 5-10 per cent during renewals in April.
KK Mishra, MD and CEO of TATA AIG, said, “Since overall the corporate sector has been going through a tough time, most corporates are trying to reduce overall outgo in terms of premium payout. Many corporates are trying to reduce or change their insurance covers.”
According to KG Krishnamoorthy Rao, MD and CEO of Future Generali Insurance, the overall insured amount has come down during the last six months due to a reduction in the overall inventory and lack of new projects in the corporate sector.
Amarnath Ananthanarayanan, MD and CEO, Bharti AXA General Insurance, said most companies have been trying to reduce their premium costs particularly in group health by introducing measures such as adding sub-limits and reducing parental cover.
Currently, the four public sector companies — New India Assurance, Oriental Insurance, United India and National Insurance — dominate the commercial lines of business in the general insurance industry.
According to industry officials, due to aggressive bidding by public sector general insurers, there has been significant movement of business in this portfolio from private sector general insurers to their public sector counterparts.
K Sanath Kumar, General Manager and whole-time director of New India Assurance, said, “In many sectors such as infrastructure and power, since many projects are stuck, there has been an impact. Also, most corporates have maintained their covers without making any additions this year.”
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