Page 7 - Insurance Times July 2022

the government takes steps. A pro- Inderjeet Singh, General Manager, Its Senior Director and Deputy Chief
posal is likely to be finalised in the com- New India Assurance (NIA), had gone Ratings Officer Krishnan Sitaraman said
ing months, "said the source. to Delhi HC on the issue of appoint- underwriting losses remain high in
ment of Satyajit Tripathy (who is cur- motor insurance because the premi-
The Centre has already completed the
rently CMD, United India Insurance) by ums earned on policies are inadequate
initial public offer of Life Insurance Cor-
the government on the basis of recom- to pay the claims made by the policy-
poration of India and is working on the
mendation of the BBB, the head-hunt- holders.
stake sale in IDBI Bank, the source fur-
ing agency of the government to select
ther noted, adding that the general in- "Therefore, any increase in premium
the top management of PSU insurance
surance space will be the next focus helps in reducing losses. So, while this
companies and banks.
area. latest increase in premiums will offer
a breather, it won't be enough to
In Budget 2021-22, Finance Minister
Rise in rates will partially stanch the bleeding," Sitaraman said.
Nirmala Sitharaman had announced
that, other than IDBI Bank, the Centre offset underwriting losses
proposes to take up the privatisation Digit Insurance targets $5
for insurers
of two public sector banks and one
The recent increase in the premium billion in IPO valuation
general insurance company in FY22.
rates on third-party motor insurance is Digit Insurance, backed by Canadian
unlikely to fully offset the motor insur- billionaire Prem Watsa's Fairfax Group,
Top brass selection of PSU
ance segment's underwriting losses, is considering raising about $500 mil-
insurers stuck Crisil Ratings said in a report. lion in an initial public offering (IPO) at
a valuation of $4.5 billion to $5 billion,
The selection process of top officials of The premium rates for third-party
three people aware of the matter told
public sector insurance companies is in motor insurance have been increased
Reuters.
limbo in the wake of the Delhi High from June 1.
Court decision to strike down the Founded in 2017, Digit is trying to capi-
Premiums for two-wheeler insurance
power of Banks Board Bureau (BBB) to talise on India's under-penetrated gen-
have risen the most - by 12-21 percent
select directors of PSU insurers. eral insurance market along with users'
- across engine capacities. For private
need for a better customer experience
With the BBB not allowed to select top cars, the maximum increase is 6 per-
like easier claim settlements, though
officials of public sector insurers, the cent.
IPOs in the country have not done well
government is now getting ready to
"The Ministry of Road Transport and in the past few months.
activate an alternative mechanism to
Highways' move to increase the pre-
conduct the exercises for selecting the Digit has appointed Morgan Stanley
mium on third-party motor insurance
top management of PSU insurers. and Indian investment bank ICICI Secu-
after two years is a step in the right
rities as bookrunners for the deal. It
"The alternative framework of BBB for direction, but unlikely to fully offset the
plans to file its draft documents to the
the selection of top PSU insurers is al- segment's underwriting losses," the
markets regulator by September and
most ready and waiting for the final ap- rating agency said in the report.
list by January, said the people, who
proval of the PMO, which had rejected
Third-party insurance cover is for other sought anonymity as they were not
some of the earlier suggestions from the
than own damage and is mandatory authorised to talk to the media.
ministry on the matter. We will imple-
(as per the Motor Vehicles Act, 1988)
ment it once the Delhi HC delivers its fi- A spokesperson for Digit declined to
to purchase along with own damage
nal verdict," official sources said. comment on "speculation". ICICI too
cover.
declined to comment while Morgan
While deciding another case involving
Underwriting losses occur when claims did not respond to emails seeking com-
a general manger of a PSU insurer,
are higher than the premium income ment.
Delhi HC had struck down the BBB's
of an insurance company.
power to select directors of PSU gen- Digit was valued at close to $4 billion
eral insurance companies and the gov- The last time premiums were hiked earlier this month when it raised a
ernment has already implemented the was in June 2019 and thereafter poli- tranche of funding. It has so far raised
verdict by cancelling all the appoint- cyholders were given some respite more than $400 million from Sequoia
ments of the then serving directors because of the COVID-19 pandemic, Capital, A91 Partners and Faering Capi-
who were selected by the BBB. the agency said. tal, besides Fairfax.
The Insurance Times, July 2022 7