Underwriting losses surge 46pc for general insurance in 2018-19

PSU insurers contributed most of Rs22,320 crore technical loss

MUMBAI: The general insurance industry in India continues to struggle as its combined loss from underwriting business has surged by 45.49 per cent to a whopping Rs22,320 crore in 2018-19, compared with Rs15,341 crore a year ago.

The efficiency of a matured insurance industry is measured from the level of earnings made from its underwriting business as against the income derived from investments made by deploying the premium income.

While the public sector insurers’ underwriting or technical losses increased by 47.06 per cent to Rs18,533 crore in 2018-19 from Rs12,603 crore in 2017-18, the underwriting losses of the private sector insurers increased from Rs2085 crore in 2017-18 to Rs2890 in 2018-19.

Standalone health insurers reported an increase in underwriting losses during 2018-19 to Rs568 crore compared with an underwriting loss of Rs436 crore during 2017-18.

At the same time, the underwriting losses of specialised insurers increased to Rs328 crore in 2018-19 from Rs218 crore in the previous year.

While the ratio of underwriting loss to net earned premium for public sector insurers during 2018-19 was 33.34 per cent, the same ratio for private sector insurers was a much lower 6.10 per cent whereas it was 7.26 per cent for standalone health insurers during the said period.

But the highest underwriting loss to net earned premium ratio was experienced by specialised insurers, which surged to 38.44 per cent during 2018-19 compared with 8.31 per cent during 2017-18.

The ratio of underwriting loss to net earned premium for general insurance industry as a class in 2018-19 was 19.98 per cent as compared with 15.27 per cent in the previous year.

 

Expenses of General Insurers

The insurance companies have been shelling out big amounts on account of commission expenses. The gross commission expenses of public insurers during 2018-19 were to the tune of Rs5041 crore, whereas that of private general insurers were a tad higher at Rs5811 crore during the said period.

While standalone health insurance companies spent Rs1411 crore on  commissions that expended by specialised insurers on commissions were a paltry Rs14 crore for the said period.

The bottom line is that the cumulative expenses incurred on account of commissions by the general insurance companies during 2018-19 were not-a-small Rs12,277 crore. The gross commission expenses were highest in the motor segment, which stood at Rs4903 crore during the said period.

 

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