Devesh Srivastava, CMD, GIC Re

Developments in the Indian insurance industry, which is expected reach Rs 2.25 trillion in 2021-22,  in the pre-renewal period indicate there have been large premium hikes in aviation, marine, group health and liability business

`We are putting our pricing approach on more sound technical basis and have tried pricing correction wherever we feel it is warranted,’’ said Devesh Srivastava, CMD, GIC Re

Mumbai/Singapore:

Apr 1 renewals, when India Inc renews most of its assets with re/insurers, has seen a price surge as reinsurers led by GIC Re and general insurers led by New India Assurance(NIA) have hiked their premiums in certain segments.

Developments in the Indian insurance industry, which is expected reach Rs 2.25 trillion in 2021-22,  in the pre-renewal period indicate there have been large premium hikes in aviation, marine, group health and liability business including cyber cover, confirmed Indian re/insurers.

As conflict in Ukraine continued in the background of renewal discussions, the market standard Sanction Limitation & Exclusion Clause, LMA 3100, saw almost universal adoption. This move is part of an ongoing wider post-Covid trend among reinsurers to push for greater clarity of coverage, said Gallagher Re, the fourth largest global global reinsurance broker .

Though, property line of business has seen some amount of stability in terms of pricing, the advantages have been largely neutralised by a cut-throat competition among the re/insurers to grab the huge SME business.

“We are putting our pricing approach on more sound technical basis and have tried pricing correction wherever we feel it is warranted,’’ said Devesh Srivastava, CMD, GIC Re.

GIC Re has the first right of refusal and commands over 60 per cent of the market share in the Indian reinsurance market which had a size of over Rs 44,000 crore in 2020-21.

The market has evolved to become far more segmented and sub-segmented and any broad-brush impact is increasingly difficult to see, noted Srivastava.

For example, aviation class is presently facing the uncertainty in regard to facing major claims on leased aircraft and this will certainly impact the aviation class.  However, market wide impact is not expected to be significant, explained Srivastava.

Globally, there is a churn following record level catastrophe losses during last three—four years and the situation was exacerbated by the pandemic. It is expected that the premium hardening rates witnessed during last couple of years will sustain for at least for some time, predicted Srivastava.

April 1 markets continue to signal a hardening stance in general across both property engineering as well as motor third party for the markets by reinsurers, said a senior official of an Indian foreign reinsurance branch(FRB).

“However, capacity is generally available and absence of substantial losses in India point to a flat to a moderately higher renewals in non proportional on average with significant variance between accounts,’’ said the official.

Proportional commissions continue to inch higher on property due to good results and holding of market rates while beginning to reduce in marine and  other loss making portfolios, he said.

Reinsurance rates showed modest increases at Apt 1 renewals  characterised by an orderly renewal season, according to the latest 1st View April reinsurance renewals report published today by Gallagher Re.

In general, buyers’ largely stable capacity requirements did not outstrip reinsurers’ collective appetite in most lines of business, said Gallagher Re.

Inflation was a key topic during every negotiation, as reinsurers sought to assess its impact on ceding companies’ portfolios to then be reflected in their pricing models. Buyers able to demonstrate that their own underwriting is taking into account inflationary impacts faced an easier renewal, explained the reinsurance broker.

On a risk-adjusted basis, loss-free property catastrophe treaty rates showed modest single digit increases similar to those seen at the January 1.2022 renewal. Property per risk business showed a far wider range of rate increases following the trend seen in other recent renewals. Casualty rates were flat, commented Gallagher Re.

“Yes, we have seen  price increase of 40 per cent in our group health portfolio due to higher claims for Covid-19 pandemic,’’ said Vinay Sohani, CEO & MD, Gallagher Insurance Brokers, Indian subsidiary of US based Arthur J. Gallagher & Co.

According to Supriya Rathi, wholetime director, Anand Rathi Insurance Brokers, the reinsurance premium for cyber has gone up by 80% to 100% and the fast-rising demand for cyber insurance is met with the broker’s vast network of reinsurers in Asia and across the globe.

The premiums for cover have increased as cyber-attacks are on both confidentiality and availability especially in the industrial sector with 330 firms hit in the last 6 months, said Rathi.

“The number of cyber claims have increased multiple folds with 4.5% of firms with 1st party cover now making a claim with an increase in the size of the claim. Since the pandemic we are seeing increasing demand and need for cyber cover across other sectors and in the last two quarters. We are working with large manufacturing companies as well for the cyber crime insurance coverage,’’ said Rathi.

Cyber risks present accumulation potential which is more challenging than even a pandemic since it has evaded geographical dimension of risk accumulation, cautioned GIC Re chief.

“We remain quite conservative here.The emerging segments do see robust growth and we will continue to provide capacity for such opportunities,” assured Srivastava.