v.r.s.nathan
15-11-2009, 02:39 PM
Non-life insurers earlier offered discounts as high as 97 per cent in some cases.
With the public sector non-life insurers rationally pricing risks, discounts on property insurance has come down by 20-25 per cent.
Recently, a textile mill at Coimbatore had to shell out 20 per cent more premium for a Rs 150-crore insurance for the mill. Similarly, a chemical factory was insured for a 25 per cent higher premium against any risk to the property.
“After the ministry asked public insurance companies to reduce their underwriting losses, they have started quoting reasonably. This has led to a correction in the prices,” said Future Generali Chief Executive Officer KS Rao.
Fire and engineering policy covers property against risks such as fire, theft and weather damage. After the Insurance Regulatory and Development Authority (Irda) allowed insurance companies to fix premium on fire, engineering and motor, they have been offering unsustainable discounts, as high as 97 per cent in some cases. Generally, the premium is paid in the range of 0.5-1 per cent of the sum assured. For a cover of Rs 200 crore, insurers were charging a mere Rs 20 lakh.
Underwriting losses of the four public sector players went up to around Rs 4,200 crore during the last financial year as against Rs 3,300 crore in 2007-08.
“The extent of discount varied from deal to deal. But there is definitely a trend reversal,” said ICICI Lombard Chief Executive Officer Bhargav Dasgupta.
Unlike aviation, where the rates hardened after major claims, property insurance has not witnessed large-size claims to drive up the premium. Insurers said that the last two incidents — fire incidents at Haldia power plant (Rs 310 crore) and Indian Oil Corporation’ Jaipur facility (Rs 140 crore) — would have an impact on the pricing.
Around 45 per cent of the risks in these cases are retained by insurers, while the rest is passed on to reinsurers. The loss ratio of the segment is at around 55-65 per cent.
Major renewals, however, take place either in January or April. Companies take a annual fire and engineering policy to cover their properties.
Insurers attributed the correction to the absence of smaller players. New players in the market are focusing more on the retail side. For example, Bharti Axa General Insurance gets 70 per cent of its income by writing retail policies.
Source - business-standard.com (http://www.business-standard.com/india/news/fireengg-policies-dearer-by-25/376261/)
With the public sector non-life insurers rationally pricing risks, discounts on property insurance has come down by 20-25 per cent.
Recently, a textile mill at Coimbatore had to shell out 20 per cent more premium for a Rs 150-crore insurance for the mill. Similarly, a chemical factory was insured for a 25 per cent higher premium against any risk to the property.
“After the ministry asked public insurance companies to reduce their underwriting losses, they have started quoting reasonably. This has led to a correction in the prices,” said Future Generali Chief Executive Officer KS Rao.
Fire and engineering policy covers property against risks such as fire, theft and weather damage. After the Insurance Regulatory and Development Authority (Irda) allowed insurance companies to fix premium on fire, engineering and motor, they have been offering unsustainable discounts, as high as 97 per cent in some cases. Generally, the premium is paid in the range of 0.5-1 per cent of the sum assured. For a cover of Rs 200 crore, insurers were charging a mere Rs 20 lakh.
Underwriting losses of the four public sector players went up to around Rs 4,200 crore during the last financial year as against Rs 3,300 crore in 2007-08.
“The extent of discount varied from deal to deal. But there is definitely a trend reversal,” said ICICI Lombard Chief Executive Officer Bhargav Dasgupta.
Unlike aviation, where the rates hardened after major claims, property insurance has not witnessed large-size claims to drive up the premium. Insurers said that the last two incidents — fire incidents at Haldia power plant (Rs 310 crore) and Indian Oil Corporation’ Jaipur facility (Rs 140 crore) — would have an impact on the pricing.
Around 45 per cent of the risks in these cases are retained by insurers, while the rest is passed on to reinsurers. The loss ratio of the segment is at around 55-65 per cent.
Major renewals, however, take place either in January or April. Companies take a annual fire and engineering policy to cover their properties.
Insurers attributed the correction to the absence of smaller players. New players in the market are focusing more on the retail side. For example, Bharti Axa General Insurance gets 70 per cent of its income by writing retail policies.
Source - business-standard.com (http://www.business-standard.com/india/news/fireengg-policies-dearer-by-25/376261/)