Page 8 - Insurance Times October 2020

de-grew by 19.3 per cent in Septem- higher, but anecdotal data suggest rate regime is only set to head south.
ber when compared to a year ago. that as the crop insurance scheme has The days of getting 10-15% returns on
Data from IRDAI revealed that gross been made optional, farmer enrol- investments are well past us and now
direct premium for AIC stood at ment has reduced," it noted. anything between 4-5% is a good re-
Rs.2,569.64 crore in September 2020 "September 2020 gross domestic pre- turn," he said. "Following reinsurers
against Rs.3,187.57 crore in Septem- mium income (GDPI) dipped 4 per cent from the West, (we are working) on a
ber 2019. yearon-year after three consecutive combined ratio of shift in our business
and mindset, and treat investment in-
However, between April and Septem- months of positive growth. The dip come as an icing on the cake."
ber 2020, AIC registered a 10.63 per could be due to a large base of crop
cent growth in gross direct premium to insurance in September 2019. Monthly Srivastava, however, said the process
Rs.7,250.80 crore against Rs.6,554.36 average run rate of crop GDPI in FY20 would be time consuming for the pub-
crore in the same period a year ago. was Rs.2,700 crore, and September lic sector reinsurer set up in 1972. GIC
2019 saw GDPI of Rs.10,900 crore," Rs is now among the three insurance
The figures come in the backdrop of an said ICICI Securities in a research re- entities along with Life Insurance Cor-
overall 4.4 per cent decline in gross port. poration of India (LIC) and New India
direct premium for non-life insurers in Assurance (NIA) to be classified as "sys-
September 2020 to Rs.23,056.80 crore Under the new guidelines introduced temically important" and "too big to
from Rs.24,121.56 crore a year ago. by the Centre in February for the fall."
Pradhan Mantri Fasal Bima Yojana, it
Insurers said that typically the pre- is optional for loanee farmers to join Srivastava said that the new IRDAI clas-
mium for kharif season is booked by the scheme and business is allocated sification aimed at improving the cor-
September every year. to insurers forthree years. porate governance and risk mitigation

"Many States have not participated in In kharif 2020, a total of 11 insurance practices at large insurance entities
the scheme, so the premium is bound companies participated in PMFBY, with would help the company continue to
to be lower by about Rs. 10,000 crore as many as 1.37 crore farmers insured. follow best industry practices.
this fiscal and will be about Rs.21,000
crore. However, it is likely to increase GIC Re's chiefasserts new General insurance industry's
as the tender for Madhya Pradesh was
finalised late and the tender for Tamil IRDAI classification aimed gross direct premiums falls
Nadu is also likely to be finalised soon. at improving the corporate 4.41%
So, this will add about Rs.5,000 crore, Gross direct premium underwritten by
which may get reflected in Decem- governance and risk miti- the general insurance industry came
ber," said Satyajit Tripathy, General gation practices down 4.41% in September as motor
Manager, General Insurance Corpora- According to Devesh Srivastava, Chair- insurance and crop insurance busi-
tion of India. man and MD of GIC Re, In the 50 years nesses remained under stress.
States such as Gujarat, Telangana and of our existence, we have in all but two IRDAIA data revealed that general in-
Andhra Pradesh have not participated years posted a loss - once in 2011 dur- surance companies' registered premi-
in the scheme this year. "Typically, ing Thailand floods and now in the first ums grew 1.57% to Rs 97,025.04 crore
Gujarat brought in a large chunk of the quarter FY21. over April and September this year,
premium. With States not participat- A robust return on investments in compared to Rs 95,528.40 crore
ing, the premium will come down," India's secondary market has always clocked in the previous financial year.
noted another insurer. helped the reinsurer offset any losses In September this year, the non-life

According to CARE Ratings, non-life on account of underwriting risks. insurance industry saw gross direct
premiums had increased in September In the first quarter of FY21, the com- premiums of Rs 23,056.80 crore
2019, primarily due to higher crop in- pany posted a loss of Rs. 557 crore, against Rs 24,121.56 crore in Septem-
surance premiums. largely due to Rs. 1,700 crore worth of ber last year, clocking a fall of 4.41%.
"In the current year, crop insurance underwriting losses. Mahesh Balasubramanian, MD and
premiums till August 2020 have been "We do understand that the interest CEO of Kotak General Insurance, said,
The Insurance Times, October 2020