Public sector general insurers outshine their private peers

Public sector general insurance companies seem to be bouncing back under the detariff regime.

The four nationalised general insurance firms have pipped their private-sector counterparts in business premium growth in the first nine months of the current fiscal.

The private general insurance firms saw an almost 42% decline in premium underwritten during April-December 2009, as against the corresponding period of the last year.

The nationalised majors, on the other hand, reported 11% growth in the premium underwritten in the first nine months in 2009-10.
During the same period of the last fiscal, they had logged in a growth of 7.6%.

Interestingly, the overall general insurance industry growth of almost 10% in April-December has been largely contributed by the public sector companies, which cumulatively grew by higher 11.37% than the overall market average.

Private biggies like ICICI Lombard General, Bajaj Allianz General and Tata AIG General saw degrowth in the first nine months.

The figures released by the Insurance Regulatory & Development Authority indicate a clear decline in the rate of growth of the nine-month premium for the private sector in 2008-09 and 2009-10.

Some of the private sector players such as Royal Sundaram, Reliance Life and Iffco-Tokio grew 11.43%, 4.58% and 4.61%, respectively in the first nine months.

Cholamandalam grew 13% whereas HDFC Ergo General, which picked up a higher tempo in the last couple of years, has shown significant growth of 183%.

Among the public sector players, United Insurance reported a 19.34% premium growth while New India Assurance grew its business premium by 9% — both on higher bases.

A senior official of United India Insurance told DNA, that there was a continuous trend of growth over the last few years. “But to be honest, 2008-09 was a watershed year for us when we were able to break through and get back the market share which we lost out since the industry was privatised. Moreover, the results of a reengineering exercise that we conducted with the help of the Boston Consulting Group, has paid rich dividends,” the official added.

According to an industry analyst, detariffing has helped the public sector players a lot.

“Having deep pockets, they could afford to discount rates significantly. For some of the private players, however, growth was very fast in the initial years and some of the degrowth at present could be attributed to a conscious decision by them to underwrite better risks,” the analyst said.