Tuesday, Apr 23, 2019 | Last Update : 09:23 AM IST

Non-life insurers rue non-revision of premium

THE ASIAN AGE. | MADHUSUDAN SAHOO
Published : Apr 16, 2019, 3:02 am IST
Updated : Apr 16, 2019, 3:02 am IST

The motor segment is the largest portfolio for the general insurance business.

Since the premium rates haven’t gone up, the insurers may cut down on discounts to offset the revenue loss.
 Since the premium rates haven’t gone up, the insurers may cut down on discounts to offset the revenue loss.

New Delhi: The profitability of the general insurance companies is likely to take a hit as insurance regulator Insurance Regulatory and Development Authority of India (Irdai) has not increased the motor insurance premium rates from April 1 this year.

The general insurers were expecting at least a marginal increase in premium rates as they are faced with relatively lower premium collections and high claim rates in the motor insurance segment.

The motor segment is the largest portfolio for the general insurance business. Since the premium rates haven’t gone up, the insurers may cut down on discounts to offset the revenue loss.

“With a pause in revision of third-party motor insurance premiums, we expect an impact in our respective portfolios because of inadequate premiums and higher claims. We were expecting at least a marginal revision in the premium rates from the regulator but it did not happen. Though volume may increase in some way or the other, the value will take a dent in our motor segment business,” an industry source said.

“We normally offer a host of discounts to our policyholders to lure them to come back to us for renewal every year. But, now we will have to cut these drastically to maintain profitability,” said an insurer.

Private general insurers were reluctant to comment on the issue. A spokesperson of Bajaj Allianz General Insurance said the firm would be able to comment as and when the regulator’s revised third-party rates come into effect.

Perhaps, for the first time, Irdai, in its order on March 28, 2019, extended the validity of third-party motor premium rates until further orders.

Generally, premiums are revised between 10 per cent and 40 per cent, depending on the type of vehicle, from April 1. However, fiscal 2018-19 saw two premium hikes, in April and September. This was because of a Supreme Court order that had made it mandatory to buy three-year car insurance and five-year bike insurance for third-party liabilities.

Tags: general insurance, irdai