Aided by drop in claim and expense ratios, country’s largest non-life insurer, New India Assurance (NIA)  reported a net profit of Rs 617 crore for the third quarter ending December 2017, compared to a loss of Rs 24 crore in same quarter last fiscal. 


Operating profit of the company, which made its stock market debut in Nov 2017,  stood at Rs 362.36 crore in Q3 2018 as against losses of Rs 362.20 crore during the year ago period.


Announcing the 3rd quarter performance on Saturday afternoon, G Srinivasan, Chairman cum Managing Director said, “The results of the company have improved substantially due to improvement in combined ratio. The drop in combined ratio was aided by lower claims ratio and operating expense ratio due to various steps taken by the company.”


The gross written premium for the company stood at Rs 6,385crore- up by 23 per cent in Q3FY 18 as against Rs 5,213 crore in the year-ago period. The company’s solvency ratio currently stands at 2.39 per cent(2.17 per cent).


Combined ratio – a key parameter of general insurance company reflecting  the financial health of the company- of the company, for the reporting period came down to 109.13 per cent from 123.95 per cent posted  during  year ago period, while incurred claim ratio dipped to 82.82 per cent from 95.61 per cent recorded in year-ago period. The management expense ratio of the company also came down to 17.5 per cent in the reporting period from 21.2 per cent in the year- ago period. The company's adjusted combined ratio at 92.85 per cent in the reporting quarter has improved from 108.21 per cent in the year-ago period. 

NIA’s underwriting losses of the company improved to Rs 464.30 crore in third quarter as against Rs 1036.89 crore in corresponding quarter of the last fiscal.


The combined ratio of the company would further come down to 105 per cent during next fiscal.
“We are targeting a combined ratio of 100 by 2020,’’ he said.


Senior officials in the company also added that, they have exited many loss making portfolio especially in the health and motor segment. In motor, the claim ratio has come down by 10 per cent while in health insurance the claim ratio has come down by 13 per cent, said NIA chief.


Srinivasan said  the industry is looking at a growth of 20 per cent in business for the current fiscal as it was aiming to cross Rs 10 trillion mark by 2030.


As of now, while motor comprises 40 per cent of the total premium for the company, health and fire comprises 27 per cent and 12 per cent respectively. 


“Our motor portfolios are growing as the company has moved to segment where loss ratio was less. Also, the company has moved to more profitable retail segment under motor insurance portfolio,’’ he said. 


Commenting on the recent  Motor Insurance Service Providers" (MISP Guidelines)  issued by the insurance regulator IRDAI,  he said, it will bring down loss ratio in motor insurance (own damage) segment.


Srinivasan hoped that the government may increase premium for PMSBY to Rs 30-35 from existing Rs 12 when it reviews the segment in May as the loss ratio in the portfolio has gone up to 200 per cent.


The company has so far issued five policies by combining D&O and professional liability for insolvency professionals, he said.

He said that as proposed in the Budget -2018, micro insurance products would be sold to 60 crore account holders of Pradhan Mantri Jan-Dhan Yojana (PMJDY) scheme.

“There is another thrust given through banking channel to bring more and more people under insurance fold,’’ he said.
On reinsurance pricing, Srinivasan said, it would remains flat across the world, except for certain parts western world that was affected by the hurricanes and storms.


Talking about company’s new products, he said NIA will come out with a health insurance product for senior citizens and the company has already filed for the product before the regulator.


Moreover, the company is ready to launch country’s first Title Insurance product. As per Real Estate (Regulation and Development) Act,  (RERA), it has become mandatory for the real estate developers to buy such products.


Nine Months
For the first nine months of the fiscal, net profit of the company was Rs 1865 crore up from Rs 455 crore during the  year ago period. Incurred claim ratio of the company came down to 85.89 per cent during the reporting period from 93.27 per cent in the year ago period. NIA's gross written premium (GWP) of the company was at Rs 19208 crore up  from Rs 16416 crore earned in the year- ago period.. The company’s underwriting loss for first nine months improved to Rs 1746 crore from Rs 2839 crore posted in the year ago period. Investment income of the company for nine months increased to Rs 4015 crore from Rs 3300 crore mopped up in the year-ago period.


The company currently has a technical reserve of Rs 29,500 crore. Its net worth including fair value is pegged at Rs 40922 crore(Rs 35, 640 crore).NIA's asset base has reached Rs 78,415 crore during the first nine months of the current fiscal.  


The company underwrote a crop insurance premium of Rs 1500 crore in first nine months of the fiscal up from Rs 1200 crore mobilised during the year-ago period. Moreover, the segment has reported claim ratio at 65 per cent during the period.

“The portfolio has been profitable up to some extent for the industry during the 2016-17 but not windfall as being talked by some in the country,'' said Srinivasan. 


On Merger of three public sector general insurance companies
Merger is always good, but it has to be properly managed. It requires merger of people process and IT. The government has weighed pros and coins and then only taken a call. It can be done in a proper manner. There is a need of bigger insurance companies in the market, rather than the smaller companies.


 On the Budget 2018 proposal on National Health Protection Scheme (NHPS)
It is  very positive as it would help increase insurance penetration further. Pricing for NHPS is a debatable issue at the moment as contours are being fianlised. It also depends on tying up with different hospitals. 


“We will look out for the infrastructure of the hospital before tying up with them for the scheme. We will also grade the hospitals based on the infra they have,’’ he said..


Rashtriya Swasthya Bima Yojana (RSBY), which has been running for almost a decade now, has given insurers a lot of experience. There are states where the loss ratio was high and then there are states where loss ratio has been favourable. 

“I don’t see too much profit, but it is going on in a viable manner,’’ he explained..

Trust model is implemented by the government itself. But the insurance model is done by the involvement of an insurer. It helps in things like fraud control and proper claim management. 


Andhra Pradesh and Telangana and to a certain extent Karnataka, which are doing it through trust model, have already proved that the insurance model was an effective model to go for such mass schemes, he said.. 


“It has been observed that insurance model was the most effective one. 
Still, it depends on proper pricing of premium and efficient claim management. No mass scheme is running in losses,’’ he stated.



Deferment of promotional exercise

“This year we had decided to go for internal promotional exercise early. Normally we begin it in April. But we had planned to go for early this year. There was no talk of merger when we had decided it. There was some practical difficulties in going for such examinations s in February. Hence we decided to do it later.'' said Srinivasan.