Premium mobilisation: PSU normal insurers lose market share in Jun quarter

With public sector insurance coverage normal firms, which as soon as monopolised the sector, focussing extra on income, they’ve misplaced market share in gross premium underwritten to the aggressive non-public sector through the quarter ended June 30, 2022.

While the market share of personal firms rose to 51.82 per cent in June 2022 from 47.63 per cent a 12 months in the past, PSU normal insurers misplaced the market share from 42.23 per cent to 37.85 per cent. Gross premium assortment of normal insurance coverage firms confirmed a progress of 23 % at Rs 54,492 crore for the quarter ended June 30, 2022.

According to the information accessible from the General Insurance Council, non-public sector firms registered greater progress of 33.8 % at Rs 28,235 crore in premium assortment for the June quarter. However, 4 public sector normal insurers witnessed solely 10.25 % progress in premium assortment to Rs 20,626 crore over the last 3 months.

Among non-public sector firms, ICICI Lombard General insurance coverage retained the highest place by mobilising a Rs 5,370-crore premium, an increase of 43.86 % progress. Bajaj Allianz mobilised Rs 3,100 crore through the quarter, progress of 25.43 per cent.

The New India Assurance, India’s largest normal insurer however functioning and not using a Chairman and MD now, reported an 8.13 per cent rise in premium assortment at Rs 9,550 crore through the June quarter, in line with the Council’s information. Health insurance coverage firms mobilised Rs 5,263 crore, a progress price of 28.63 per cent through the quarter.

According to insurance coverage sources, the federal government has requested PSU normal insurers to concentrate on profitability somewhat than going for a better high line in loss-making areas.

The Finance Ministry has requested Central Public Sector Enterprises (CPSEs) and authorities departments to calm down the requirement of minimal solvency ratio of 1.5 of the liabilities as one of many eligibility standards for the participation of public sector insurance coverage firms within the tender course of.

According to an workplace memorandum by the Ministry to numerous departments and insurance coverage corporations, the stipulation on excessive solvency ratio makes three of the 4 public sector normal insurance coverage firms — National Insurance Company Ltd (NIC), Oriental Insurance Company Ltd (OIC) and United India Insurance Company Ltd (UII) — ineligible to take part within the tender course of despite their “vast experience and risk management skills”.

The Ministry’s observe follows the extraordinary competitors within the sector and the decline within the efficiency of three PSU insurers. Only New India Assurance Company Ltd has reported a solvency ratio of greater than 1.5 among the many 4 PSU insurers. Government departments and CPSEs, which represent an enormous marketplace for insurance coverage firms, award insurance coverage contracts by means of a young course of.

Solvency ratio — web earnings and depreciation divided by liabilities — is the monetary capability of an insurance coverage firm to satisfy its obligations. A excessive ratio means the corporate is financially sound and it has sufficient capital to pay all legitimate claims. As per the IRDAI’s mandate, the minimal solvency ratio that insurance coverage firms should preserve is 1.5 to decrease dangers. In phrases of solvency margin, the required worth is 150 per cent.