Kolkata, May 26 (IANS) General insurers are incurring losses in their insurance business mainly due to underwriting losses in health and motor segments, a top official said on Thursday.
“Most of the general insurance companies would be making losses out of their insurance business mainly because of underwriting losses in motor and health insurance segment,” said National Insurance’s Chairman and Managing Director K. Sanath Kumar.
“General insurers made underwriting losses till third quarter of the last fiscal (2015-16). The fourth quarter and the annual results are yet to be published,” he said.
“We have seen increasing trend of claims in health and motor insurance including own damage and third party claims,” Kumar said.
“There is a huge price competition in corporate health insurance segment where insurers offer special package to get more business. In retail business (health insurance), we cannot increase prices of the products frequently as per regulatory mechanism while the cost of medical treatment has been going up,” Kumar said on the sidelines of a programme — Indian Insurance Industry: Road Ahead — organised by the Bengal Chamber of Commerce and Industry.
“Medical inflation in the country is very high. The average underwriting losses of health insurance of public general insurers remain 80-100 percent. Health insurance is not profitable,” he said.
According to the official, the regulatory authority does not allow to enhance premium or adjust prices with increasing cost as frequently as they want.
General insurers are making profits from their investments, he said. Insurers are making profits in segments like fire, engineering and others where volumes are relatively small.
Almost 75 percent of premiums in the industry come from motor and health segment, he said.
“There may be a requirement of price correction to make health and motor insurance profitable, probably more interventions may be required to manage uncontrolled claims,” he said.
Public general insurers floated own third party administrator company – Health Insurance Third Party Administrator (TPA) of India to manage health claims of public insurers and started its commercial operation from last year, Kumar added.