Insurance Day Asia
DETARIFFING WILL HIT INDIAN INSURERS’ COMBINED RATIO SAYS REPORT
The forthcoming detariffing of sections of the Indian insurance industry will lead to an increase in the underwriting losses of insurers in the country, according to a study from CRISIL. The study projected a 10% fall in the premiums for fire, engineering and motor own-damage, while there would be a 20% gain in third-party motor cover. The overall impact on the industry’s underwriting result would be in the region of 17%, the report claimed. CRISIL financial sector ratings head Krishnan Sitaraman said that “underwriting losses will increase immediately after de-tariffing, as the benefit from the increase in motor third-party premiums will be insufficient to offset the impact of the reduction of premium levels in profitable segments”. However, he did not think that the financial stability of domestic public sector non-life insurers would be impacted, since they had “robust capitalisation levels” as well as large reserves from profits on investments as-yet unbooked.