Insurers' losses to remain high despite premium hike: Experts

Tags: News
The 10-15 per cent average hike in third-party motor premium by the regulator is not sufficient to cover the losses and therefore the claim ratio will stay high, say industry officials.

"The average hike of 10-15 per cent by the regulator IRDA is not enough to cover higher claims in this segment," Future Generali India Insurance chief executive KG Krishnamoorthy Rao told PTI.

He said the claim ratio is likely to stay in the range of 140-150 per cent in this segment despite the premium hike.

The regulator IRDA has raised the third-party motor premium by 10-15 per cent, effective April 1, against a demand for a minimum 50 per cent increase by the industry.

The third-party motor insurance, premia of which is regulated by IRDA, is one of the loss making segments and the industry has been constantly demanding for higher premia to cover the mounting losses.

A Tata AIG General Insurance official said insurers will take up this issue with the General Insurance Council and will approach the regulator for reconsideration.

"We will take up this issue with the General Insurance Council and approach Irda for reconsideration," Tata AIG General Insurance chief executive K K Mishra said, adding that the loss ratios will remain high despite the hike.

He added that after raising the provisioning (the amount of money general insurers need to set aside to meet the high level of claims) to 210 per cent of the claims from 145 per cent last year, premium rates should be more.

ICICI Lombard General Insurance chief (Underwriting and Claims) Sanjay Datta said, "The increase in the third-party premia will have limited impact on private car and two-wheeler customers since third-party premium constitutes a small component of the total premium."

The rate increase is a prudent attempt to maintain the balance between the need to increase rates given the rise in claims and impact on customers, Datta added.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • With RBI’s role diluted, we are moving closer towards a super regulator

    The government and the Reserve Bank of India (RBI) have signed a monetary policy framework agreement last month under which RBI will be committed to b

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Roopen Roy

The making of a digital Bharat

Exactly 20 years ago, Nicholas Negroponte of MIT Media Labs ...

Rajgopal Nidamboor

The eternal radiance of our being

We sense, we sight, we smell, we touch, we hear, ...

Shona Adhikari

Art world celebrates two ‘new’ Cezannes

The focus moves once more to post-impressionist Paul Cezanne, who ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture