Mumbai:
State owned New India Assurance, at Rs1418 crore, might have contributed the highest net profit to the domestic general insurance industry, but the sector with 32 players has been saddled with total losses of Rs 1402 crore in FY 2019-20 as mainly other three PSU general insurers, United India Insurance(UII), National Insurance Company(NIC) and Oriental Insurance Company(OIC) have dragged down the financials of the sector with their huge underwriting losses and net losses during the period.
The total underwriting losses of the industry have surged by 4.4 per cent year on year(y-o-y) to Rs 22,859 crore in 2019-20, according to the statistics compiled by GI Council,the official representative body of all domestic re'/insurers. .
In FY 2018-19, the industry had made a net profit of Rs 683 crore as compared to a net profit of Rs 6,909 crore in 2017-18.
Three PSU general insurers, with their large underwriting losses of Rs14,443 crore, together have been responsible for the overall losses of over Rs 7118 crore in FY 2019-20.
NIC, with a combined ratio of 160.8 per cent and underwriting losses of Rs 5,759 crore, has suffered losses of Rs 4108 crore while OIC(141 per cent, Rs 4,197 crore) and UII (132 per cent, Rs 4,487 crore) have been hit with losses of Rs1524 crore and Rs 1486 crore respectively in FY 2020-21.
Out of 20 private sector general insurers excluding the stand-alone health insurers, 11 players, led by ICICI Lombard General Insurance(with a net profit of Rs 1194 crore) have succeeded in ending the year with some profitability while out of six exclusive health insurers only two have made net profit during 2019-20.
Two-year old insurtech Acko General Insurance, at almost 210 per cent, has witnessed the highest combined ratio(CR) in the industry.
It has been followed by other new comers like Edelweiss( CR of 193 per cent)and Sachin Bansal owned Navi General Insurance(CR, 165 per cent).
Shriram General Insurance, at 91 per cent, SBI General Insurance(93.5 percent), Universal Sampo(96.5 per cent, Care Insurance(98.4 per cent) StarHealth Insurance(93 per cent). have earned the distinction of having low combined ratio in the industry and are a very few companies(excluding Care) which have seen underwriting profits in FY 2019-20.
Combined ratio is the most important profitability parameter of a general insurance company and a combined ratio below 100 per cent means the company is making underwriting profit.
While the three public sector general insurers have been burdened with high combined ratios due to legacy issues, the new entrants’ higher combined ratio can be attributed to their high business expenses and low premium and investment income in the initial years, said analysts.
The top three private sector general insurers, ICICI Lombard General Insurance(CR of 100.4,underwriting losses Rs 105.16 crore)Bajaj Allianz General Insurance (100.8 percent, Rs 10.90 crore) and HDFC Ergo General Insurance(102.60 per cent, Rs 177 crore)have seen negative CRs and underwriting losses in 2019-20…
The size of the manpower in the domestic general insurance industry has gone up by 5 per cent y-o-y to 1,41 , 631 though number of offices in the sector have fallen marginally, by 1.4 per cent, to 11.380 in Fy 2019-20.
The sector has been able to attract higher foreign direct investment(FDI), that has risen by 12 per cent y-o-y to Rs 4,721 crore, during the reporting year.
The sector’s exposure for infrastructure sector has increased by 3.5 per cent y-o-y to Rs 56,117 crore in FY 2019-20.
Though, the industry as a whole has been dragged down by large losses, the sector’s capital and reserve have soared by pver 14 per cent y-o-y to Rs 70,221 crore in FY 2019-20.
The domestic general insurance industry's gross premiums, including premiums mobilised by general insurers, exclusive health insures , state owned Agriculture Insurance Company and state owned credit insurer ECGC, had expanded by 11.4 per cent y-o-y to Rs 1, 92.132 crore while its net premium had increased by 8.1 pr cent y-o-y to Rs 1,30.124 crore in 2019-20.
Total gross claims paid by the industry has risen by 9.6 per cent to Rs 1, 52.938 crore while net claims settled by the industry has jumped by 7.2 per cent y-o-y to Rs 1,08,319 in 2019-20.