The four PSU general insurers, which together have over 35 per cent of industry’s market share, have generated 70 per cent of its underwriting losses in FY2021-22
19 full fledged private sector general insurers, led by IFFCO Tokio General Insurance, have incurred underwriting losses of Rs 6,125 crore, up by 74 per cent, in FY2021-22
AIP Analytics report further shows, out of 31 general insurers, only three companies- Bajaj Allianz General Insurance(Rs 52.66 crore), Care (Rs 151 crore) and ECGC (Rs 85.12 crore )have succeeded in generating underwriting profits during 2021-22
Due to massive Covid-19 pandemic claims, since March 2020, the Rs 2,23 trillion Indian general insurance industry has seen its underwriting losses shooting up by almost 50 per cent year on year(y-o-y) to a record Rs 28,509 crore in 2021-22 from Rs 19,416 crore in FY2020-21.
The underwriting losses, at Rs 22,859 crore in 2019-20, had fallen by 17 per cent FY 2020-21.
According to a report prepared by AIP Analytics, the industry’s overall combined ratio(CR), at 118.82 per cent, has also shown a deteriorating trend in FY2021-22. It was 112.01 per cent in FY2020-21.
Any CR above 100 per cent for a general insurer indicates that the company is paying more claims over earned premium and is incurring underwriting losses affecting its overall profitability.
Normally, the underwriting losses in the domestic general insurance industry are caused by excess payment of claims in the motor third party business, which even wipe out any profits accrued in other segments, but during FY2021-22, the losses have flared up due to massive claims out go due to Covid-19 Pandemic.
AIP Analytics report further shows, out of 31 general insurers, only three companies- Bajaj Allianz General Insurance(Rs 52.66 crore),Care, a stand alone health insurer(Rs 151 crore) and state owned ECGC (Rs 85.12 crore )-have succeeded in generating underwriting profit during the reporting year, which has largely been disrupted by the Covid-19 Pandemic.
Led by New India Assurance(NIA), the country’s largest general insurer, the PSU general insurers, have been the largest contributors to the underwriting losses of the industry during 2021-22. Together, the four PSU general insurers have added almost Rs 20,000 crore of underwriting losses in FY2021-22, up by almost 54 per cent over Rs 13,225 crore in FY2020-21.
The underwriting losses of four PSU general insurers in FY2021-22 include-NIA(Rs 6,151 crore, CR of 120.70 per cent ) National Insurance Company(Rs 4,310 crore, 134.16 per cent)), Oriental Insurance Company (Rs 5,265 crore, 144.25 per cent) and United India Insurance (Rs 4,260 crore,136.11 per cent).
The four PSU general insurers, which together have over 35 per cent of industry’s market share, have generated 70 per cent of its underwriting losses in FY2021-22. The overall CR of PSU general insurers has deteriorated from 112.53 per cent in FY 2020-21 to 130.22 per cent in FY 2021-22
Similarly,19 full fledged private sector general insurers, led by IFFCO Tokio General Insurance, have incurred underwriting losses of Rs 6,125 crore, up by 74 per cent, in FY2021-22.
The overall CR of private sector general insurance players have dipped from 104.61 per cent in FY 2020-21 to 110.12 per cent in FY2021-22.
IFFCO Tokio General Insurance, with a CR of 116 per cent, has suffered an underwriting loss of Rs 997 crore during FY2021-22.
The underwriting losses of some of the other private general insurers are -Tata AIG General Insurance (Rs 738 crore, CR of 107.86 per cent), Go Digit General Insurance, whose IPO plans has recently been blocked by the Sebi(Rs 730 crore,112.65 per cent),SBI General Insurance(Rs 614 crore, 113.70 per cent ), HDFC Ergo General Insurance (Rs 566 crore, 107.48 per cent), ICICI Lombard General Insurance(Rs 532 crore,108.82 per cent ),Royal Sundaram General Insurance(Rs 363 crore, 116.74 per cent),Reliance General Insurance(Rs 180 crore, 108.23 per cent).
However, the underwriting losses of five stand alone health insurers have fallen marginally from Rs 2,540 crore in 2020-21 to Rs 2,484 in FY2021-22.
The overall CR of exclusive health insurers have fallen from 111.90 per cent in FY 2020-21 to 115.88 in FY 2021-22.
Among the stand alone health insurers, Aditya Birla Health Insurance, with a CR of 126.32 per cent, has been saddled with the largest underwriting loss of Rs 403 crore during the reporting year.
Agriculture Insurance Company(AIC) has taken a hit of Rs 101 crore of underwriting loss while ECGC which is planning an IPO shortly, has an underwriting profit of Rs 85.12 crore during FY2021-22.
One of the youngest companies with investment from well known IT entrepreneur Narayan Murthy, Acko General Insurance, at 171.17 per cent, has the highest CR while ECGC, at 90.97 per cent, has the lowest CR in the industry in FY2021-22.
According to the insurance regulator IRDAI, 30 functioning general insurance companies, including five exclusive health insurers, have already settled over Rs 26,000 crore for paying over 26 lakh claims thereby paying average payment of Rs 1 lakh per claim since March 2020.
In FY 2021-22, a total of almost 18 lakh Covid claims were settled for an amount of Rs 16,190 crore, almost double of both what was paid in terms of number of claims and amount in FY 2020-21.
Almost 1,17,000 claims amounting to Rs1,163 crore were repudiated or still pending for payment by the general insurance companies during FY 2021-22 and over 2,15,000 claims amounting to Rs 1,500 crore have been rejected or pending with general insurers in the last two years.