India: General insurers do not expect technical profits for another two more years
Source: Asia Insurance Review | Nov 2016
General insurance companies in India are unlikely to make underwriting profits for at least two more years, according to state-owned National Insurance Company’s Chairman and Managing Director, Mr K Sanath Kumar.
Underwriting losses arise mostly from group health schemes and third-party motor insurance claims, he told the Livemint news website in an interview.
“The problem is, the healthcare sector in India is not regulated. So, there are a lot of irregularities,” he said. Also, the cost of healthcare has gone up substantially, but insurers have not been able to price group insurance policies correctly because of competition. “We continue to undercut each other,” he added.
Losses from third-party motor insurance claims are another concern. Both the ceiling for the liability and the premium that insurers can collect are determined by the industry regulator. However, the pricing is improving, he said.
General insurance companies in India make money from investments. Mr Kumar, who assumed the top post at National Insurance in February, said that the company reported underwriting losses last year of INR3,633 crore (US$545 million).
As many as 21 out of the 22 non-life insurers in India continue to lose money in their insurance business. Bajaj Allianz General Insurance has emerged as the only non-life company to make underwriting gains among the 22, the Times of India reported last month.