Kolkata based state- owned National Insurance Company(NIC) has made a net loss of Rs. 4108 crores in 2019-20.
The losses for the third year in a row can be mainly attributed to high claims ratio in our major portfolios like Motor, Health and Crop, increased provisions of IBNR and provisions for employee’s future pension liabilities.The process of rationalisation of IBNR particularly for Motor Third Party portfolio began in 2017-18 and the comoany has added more than Rs 6000 crores to its value in these three years.We have simultaneously impressed upon timely and correct reporting of claims in the system to avoid any such pitfalls in future,said Tajinder Mukherjee,CMD, NIC.
Such losses which have severely impacted the company's net worth and solvency. The Incurred Claims Ratios(ICR) of certain LOBs are a concern and various steps have been initiated by the corporate office for managing and monitoring the claims, aimed at overall reduction in ICR, thus making the business profitable, she said., .
“Despite the recurring losses, I assure you that the company is not facing any liquidity crunch and all payments towards claimants, Vendors and employees are being released on time,Austerity measures have been introduced to curb wasteful expenditure and exercise for restructuring of offices is on way to make each of the operating units viable. Growth of business as per targets given with emphasis on profitable segments.'' said Mukherjee.
Meanwhile,the government has infused Rs 1675 crores as additional capital in July 2020. There is provision for further infusion of capital in this year which is linked to achievement of KPIs for growth, ICR and curtailment of expenses,the targets.
In view of the Pandemic, as the opportunities for new business dwindle, it is important that each and every renewal is tracked and renewal ratios improved, suggested Mukherjee…
Some of measures she has put forward to make the company profitable are–
-prompt registration of claims and settlement strictly as per timelines targeted,effective claims management by strict monitoring of turn around times (TATs) of surveyors,TPAs etc. aimed at reduction in ICR by at least 15% for each LOB,.
-Reduction in controllable expenses by at least 30%
-Continuous engagement with and mentoring of agents and other intermediaries
-Polite and courteous service to the customers including quick redressal of grievances
-Timely release of dues to all intermediaries, Surveyors, TPAs and other professionals
“We have indications of much improved performance in the 1st and 2nd quarter of 2020-21. The successful achievement of our above objectives together with
the support of Government will certainly mark a turnaround towards profitability and improved solvency in 2020-21,'' said Mukheerjee..