Mumbai : In its bid to grow topline, the general insurance industry continues to take a hit by not raising premiums at the cost of profitability, which is a result of cut-throat competition, say industry players.
In the recent April 1 renewal, when most of the Rs 80,000-crore general insurance business get renewed, the general insurers have mostly failed to receive a better pricing due to heavy competition among themselves. In a bid to control the situation, IRDAI had recently introduced the concept of burning cost (loss figure) which has to be taken into account while pricing the fire and property product. But it has not worked out, general insurers said.
“Though the regulatory initiative is to be lauded, we find that majority of the mid to large corporate renewals remained at expiring levels of premiums, giving us the impression that market is yet to adopt the methodology wholeheartedly,” SBI General managing director Bhaskar J Sarma told PTI.
Iffco-Tokio managing director and chief executive Yogesh Lohiya also confirmed that though IRDAI’s act of introducing concept of risk pricing based on burning cost to be appreciated for, the result has to be seen. “It may take some more time for market to stabilise and implement burning cost based pricing in true sense,” ICICI Lombard chief, underwriting and claims, Sanjay Datta said adding that as the burning cost norm was implemented by IRDAI in February only, it would take some more time for them to understand its impact.
However, New India Assurance chairman and managing director G Srinivasan said, “There is slight improvement in price under property and fire segment as we have used the burning cost method in the segment which has been devised by IRDAI.”
Prices are stable across other segments. However, prices have gone up by around 14% under motor third party segment. -PTI
