Page 5 - Insurance Times December 2020

General Insurance

PSU insurers asked to re- companies during 2019-20. During this While New India Assurance contrib-

duce avoidable expenses year, the government infused Rs 3,475 uted the highest net profit of Rs 1,418
crore, the sector - comprising 32 play-
crore, while announcing infusion of the
Finance Ministry has asked 3 PSU Gen- balance Rs 6,475 crore in one or more ers - has been saddled with total losses
eral insurers, National Insurance, Ori- tranches. of Rs 1,402 crore in FY2019-20.
ental Insurance and United India Insur- The government in Budget 2020-21 The industry had made a net profit of
ance, to rationalise branches and cut had made a provision of Rs 6,950 crore Rs 683 crore in fiscal 2018-19 as com-
down avoidable expenses to improve for capital infusion in these three in- pared to a net profit of Rs 6,909 crore
their financial health.
surance companies to maintain the in 2017-18. The three PSU general in-
The ministry has asked these compa- requisite minimum solvency ratio. surers, with their large underwriting
nies to expand their business through NICL, with a combined ratio of 160.8 losses of Rs 14,443 crore, together have
digital medium. They've also been per cent and underwriting losses of Rs been responsible for the overall losses
asked to cut the flab by rationalising 5,759 crore, has suffered losses of Rs of over Rs 7,118 crore in FY 2019-20.
branches and rein in other avoidable 4,108 crore, while OICL (141 per cent, NIC, with a combined ratio of 160.8
expenses like guest houses, etc,
Rs 4,197 crore) and UIIC (132 per cent, per cent and underwriting losses of Rs
During the current year the Ministry Rs 4,487 crore) have been hit with 5,759 crore, has suffered losses of Rs
decided to halt the merger process of losses of Rs 1,524 crore and Rs 1,486 4,108 crore, while OIC (141 per cent,
three state-owned general insurance crore, respectively in 2019-20. How- Rs 4,197 crore) and UII (132 per cent,
companies due to their weak financial ever, New India Assurance, the only Rs 4,487 crore) have been hit with
positions. Instead, the government exception out of the four public sector losses of Rs 1,524 crore and Rs 1,486
approved fund infusion of Rs 12,450 general insurers, posted a profit of Rs crore, respectively, in 2019-20.
crore to meet regulatory parameters. 1,418 crore in 2019-20. Out of 20 private sector general insur-
As part of capital infusion exercise, the ers excluding the stand-alone health
government also approved raising Underwriting losses of In- insurers, 11 players, led by ICICI
authorised share capital of National Lombard General Insurance (with a net
Insurance Company Ltd (NICL) to Rs surance Industry rise to Rs profit of Rs 1,194 crore) have suc-
7,500 crore and that of United India 22,859 crore ceeded in ending the year with some
Insurance Company Ltd (UIIC) and Ori- The total underwriting losses of the profitability, while out of six exclusive
ental Insurance Company Ltd (OICL) to insurance industry have surged by 4.4 health insurers only two have made
Rs 5,000 crore each. per cent to Rs 22,859 crore in 2019- net profit during 2019-20.
The Rs 12,450 crore capital infusion 20, compared to the previous financial Acko General Insurance has witnessed
approved by the Cabinet in July in- year, according to statistics compiled the highest combined ratio (CR) of al-
cludes Rs 2,500 crore provided to these by General Insurance Council. most 210 per cent in the industry. It has
The Insurance Times, December 2020