Losses of public sector general insurers widen

Intense competition continues to extract a heavy toll on public sector non-life insurance companies. Offering insurance at unviable rates for large chunky corporate businesses has resulted in underwriting losses widening for them.

According to regulator Irdai’s annual report 2016-17, the underwriting losses of the general insurance companies increased by 26 per cent to Rs 18,840 crore in 2016-17 from Rs 14,959 crore in the previous year. The Insurance and Regulatory Authority of India (Irdai) did not disclose operating losses of individual general insurance companies.
The operating losses of four public sector general insurers — New India Assurance, Oriental Insurance, United India Insurance and National Insurance — rose by 44 per cent to Rs 15,591 crore in 2016-17 from Rs 10,835 crore in 2015-16. In contrast, private companies reported a fall of 20 per cent in operating losses at Rs 2,949 crore.

Pure-play health insurers too reported significant decrease in underwriting losses in 2016- 17 at Rs 87 crore compared to underwriting loss of Rs 272 crore in 2015-16. Insurers relied solely on their investment book to report overall profitability.

During 2016-17, the public sector companies reported a loss after tax of Rs 2,551 crore against a net profit of Rs 1,499 crore in 2015-16. On the other hand, private sector insurers reported a rise of 107 per cent in net profit at Rs 2,763 crore against Rs 1,333 crore of net profit in 2015-16. Pure-play health insurers reported Rs 27 crore net profit against a net loss of Rs 192 crore in 2015-16.

Out of four public sector insurers, New India Assurance and National Insurance reported a net profit, while Oriental Insurance and United India Insurance reported a net loss. New India reported a net profit of Rs 1,008 crore during 2016-17 against a Rs 829 crore in 2015-16, an increase of 21.59 per cent. The net profit of National has decreased to Rs 46 crore from Rs 149 crore in the year 2015-16, Oriental Insurance reported loss after tax of Rs 1691 crore during 2016-17 against a net profit of Rs 300 crore in 2015-16.

United India reported a loss after tax of Rs1914 crore during 2016-17 against a net profit of Rs 221 crore during 2015-16.

Among 18 private general insurance companies, 15 companies reported a net profit, the remaining three companies incurred losses after tax during 2016-17. The profit after tax of Bajaj Allianz during the year 2016-17 was Rs 728 crore against a net profit of Rs 564 crore in the year 2015-16. The profit after tax of ICICI Lombard General Insurance was Rs 702 crore in 2016-17 against a net profit of Rs 507 crore in the year 2015-16.The three insurers which reported losses after tax were Bharti AXA, Kotak Mahindra and Liberty Videocon.

Falaknaaz Syed