We spoke to the division head at New India Assurance who said that growth remains a concern for non-life insurers, particularly in the motor segment. While lower auto sales, because of a general economic slowdown, is one of the key reasons, there have been instances of commercial-vehicle owners (driven by slower business) not renewing policies or delaying renewals.
PSU players are also resorting to higher discounts to chase growth and branches that have claim ratios within specified limits have been allowed to increase discounts on premiums until March. Pricing for motor third-party (TP) may also come under pressure due to muted growth, and IRDAI could reduce pricing for TP premiums.
Loss ratio is likely to remain high in motor OD (own-damage) given low premiums. Private cars and two wheelers have higher loss ratios in OD compared to CVs as CV owners normally do not put forward claims. However, claims ratio is higher for CVs in the TP segment.
Merger of PSU insurers and capital infusion could increase competitive pressure, as the government is likely to infuse growth capital; the long-term plan is to list the merged entity.
Crop insurance: Re-insurance rates have hardened in the last few months, as current premiums are not sustainable. Hence loss ratio for the crop segment will continue to remain high.
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