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Due to provisioning for motor pool losses, Royal Sundaram General Insurance reported a loss of Rs 20 crore in 2010-11 as against a profit of Rs 31 crore the previous year. The company had to absorb a loss of Rs 76 crore on account of motor pool losses.
Motor pool is a corpus of premiums transferred from all general insurance companies to meet the claims-loss arising out of accident caused by trucks to third party.
The loss is shared by all the insurers on the basis of their market share. Therefore, the insurance regulator, Insurance Regulatory Development Authority, had mandated that insurers make a provisioning of 153 per cent for the last four years, including 2010-11. Simply put, companies will have to set aside Rs 153 for every Rs 100 of motor premium collected.
Premium income
In a press release, the company said it posted a 25 per cent growth in gross underwritten premiums to Rs 1,147 crore in 2010-11.
Bulk of the premium income came from providing insurance to individuals — retail insurance reported a 32 per cent jump to Rs 749 crore. The company seemed to have reduced its exposure to group insurance (insuring various risks of corporates) as it reported a growth of 8.5 per cent to Rs 156 crore. Commercial vehicle insurance registered a growth of 19 per cent to Rs 241 crore.
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