The India Inc has shelled out more for their insurance as the domestic general insurance market has witnessed price hikes- in certain segments like catastrophic and property- and tightening of overall terms and conditions during the April 1 re/insurance renewal concluded in the beginning of the month.
Led by the state-run GIC Re, the foreign reinsurers, who have set up their operations in the country during last one year, have jacked up their prices moderately during Apr 1 renewal..
“There have been some price rise in segments like catastrophe, property, and overall terms and conditions for providing reinsurance covers to the primary general insurers have been tightened in the Indian market,’’ said GIC Re sources.
“Wherever, we haven’t found a suitable pricing at the time of renewals, we have kept our exposure extremely limited,’’ said GIC Re sources.
According to the regulatory condition of `right to first refusal', the Indian general insurers first have to offer their reinsurance business to the GIC Re and if the GIC Re refuses to accept these business, then they can go to other reinsurers, located inside and outside the country, in a particular order.
“ We are the market leader in India market having almost 60 per cent of the market share and will maintain it during the year,’’ GIC Re sources added.
Though, the re/insurance renewals in the Indian market are a continuous process through out the year, majority of renewals- in the areas of property,catastrophe,and treaties- happen on Apr 1.
“Catastrophe rates were very low due to low catastrophe activity and only those property accounts with losses had some price increases.” said Shankar Gargipathy, Country Manager & CEO, India – Lloyd's of London.
GIC Re has tried to hike rates and tighten terms, but these are still quite low. Overall, it’s a flat to 5 per cent renewal, said an officials of Lloyd’s.of London.
Summing up the trends in the Indian market during the Apr 1 renewal, Willis Re, a prt of the Willis Towers Watson, the third largest global insurance broker, commented, “ The GIC Re consolidated its leading market position in proportional property despite imposing tightened terms and reduced commissions.The foreign branches of global reinsurers remain largely passive or absent in this arena . Risk and event capacity purchased remained broadly stable with some instances of modest retention uplift.’’
Following four consecutive catastrophe-hit years, the 1 April renewal has been benign with stable to moderately reduced risk-adjusted pricing against a backdrop of growing aggregates. Large single-risk loss frequency increased but not sufficiently to cause significant pricing impact, explained Willis Towers Watson.
“At the market level the renewals had some improvement on terms but the underlying market losses on property (more than 10 large industrial losses in one year) and agriculture (high loss ratios for large insurers) still make the overall reinsurance renewals challenging. The placement process was challenging for most insurers extending the overall process till last minute,’’ said an official of another prominent foreign reinsure having operations in India..
According to the French reinsurer major SCOR, at the April 1, 2018, renewals, the growth for SCOR Global P&C was achieved in both Treaty (especially in India and the U.S.) and in Specialty Treaties (including in Agriculture, Credit and Surety and U.S. Cat).
K Sanath Kumra, CMD, National Insurance Company said, April 1 has been very stable.
“There is no drastic disruption and rates were stable,’’ he said.
On the corporate group health insurance, he said,“We are currently busy on neutralisation of losses as it has been a loss-incurring business for us for the past three years. We have selectively increased the price on account to account basis under the segment.’’
Mukesh Kumar, executive director, HDFC ERGO General Insurance said, “The renewal scenario across lines have been similar to the previous year. The loss making portfolios sew some correction but, this still may not be sufficient in terms of pricing of these segments. ‘’
On global trends,Willis Re said,the trend set at 1 January continued at 1 April. “Buyers were able to renew loss-free programs, broadly achieving flat year on year renewal pricing.
“While this has been disappointing for reinsurers looking to achieve real rate increases, increased demand from a number of buyers is resulting in some new opportunities and, consequently, some welcome premium growth,’’ observed Willis.
Furthermore, insurance companies, particularly within the C-suite, continue to assess the impact of reinsurance buying to support earnings and capital management, with the value of reinsurance seen as higher than it has been in recent years