Page 9 - Insurance Times November 2022

against Rs 788 crore in H1 of 2021-22.
PSU insurers may need up to Rs. 8000 crore for
Excluding tender-driven crop and gov-
higher wages
ernment health insurance premium,
Public sector non-life insurance companies will need to raise around Rs 8,000
BAGIC's gross written premium in-
creased by 16 per cent to Rs 6,097 crore to meet statutory capital requirements after paying out the 12% wage
increase notified by the government.
crore in H1/2022-23 from Rs 5,261
crore in H1/2021-22. Apart from New India Assurance, the three public sector insurers - National
Insurance, Oriental Insurance and United India Insurance - are already short
The combined ratio, which measures
of capital.
the performance of the insurance op-
erations, stood at 102 per cent in H1/ As the companies must pay not just revised wages but the arrears since
2022-23 against 100.5 per cent in H1/ August 2017, the expenses will skyrocket, and that will put further pres-
2021-22. sure on profitability and solvency.
Significant sequential improvement The outgo for National Insurance, New India Assurance and Oriental Insur-
was seen in the September quarter of ance will be more than Rs 2,000 crore, while for United India Insurance, it
2022-23 with the combined ratio mov- will be below Rs 1,800 crore.
ing down to 99.8 per cent even with
According to industry sources, the government will have to infuse additional
one-time impact from the court order
capital into the companies. The other option would be for the non-life com-
in respect to Osmanabad kharif 2020
panies to raise subordinated debt by selling the bonds.
crop season, the company said.
The government notified the revised scheme for employees for public sec-
Bajaj Finserv Chairman and Managing
tor insurance companies. The wage revision has been hanging fire for sev-
Director Sanjiv Bajaj said in the com-
eral years. In the case of public sector banks, the wage revision took place
pany statement, "Increase in policy
in November 2020 and salaries for employees of Life Insurance Corporation
rates has resulted in higher cost of
(LIC) were revised from August 2021.
funds for lenders. The general insur-
ance sector was characterised by in-
ineligible input tax credit (ITC) without ing an appeal of Bajaj Allianz General
tense price competition in the motor
underlying supply of goods or services Insurance Company against the
segment, while the life insurance sec-
were detected, officials said. Bombay High Court order asking it to
tor recorded growth of 19 per cent in
compensate over 3.5 lakh farmers in
individual-rated new business. In this As many as 15 insurance companies,
Osmanabad for the loss of soyabean
environment, our companies contin- intermediaries, marketing companies,
crop due to heavy rain in 2020 under
ued to do well." NBFCs and banks were allegedly follow-
the Pradhan MantriFasal Bima Yojana
ing this modus operandi and evading
(PMFBY) comes as a major relief to
GST officers detect Rs. 824 GST.
farmers facing unpredictability in the
crore 'tax evasion' by in- The investigations revealed that these climate.
entities had formed an arrangement to
surance Companies pass on ineligible ITC in the guise of In May, the Bombay High Court di-
rected Bajaj Allianz General Insurance
GST officers have detected Rs 824 marketing services and fraudulent in-
crore tax evasion by 15 insurance com- voices were raised in connivance with Company to compensate Osmanabad
panies, intermediaries and banks each other, officials said. farmers. The company contested that
through issuance of fake invoices, offi- compensation cannot be paid for farm-
Investigation points to systematically
cials said. Acting on specific inputs, GST ers who had not filed claims within the
planning and executing the modus op-
Intelligence Officers in Mumbai 72-hour period of the crop damage and
erandi mainly at the behest of insur-
searched the premises of a number of had approached SC. Unseasonal rains
ance companies, they added.
corporates -- insurance companies, in- and hailstorms hit badly for the last few
termediary marketing/branding com- SC directs Bajaj Allianz to years causing massive damage to
panies, NBFCs and banks, in multiple kharif and rabi cultivation. In Decem-
pay Rs.200 crore crop loss
cities. ber 2021, the State Grape Growers'
compensation Association had estimated a loss of Rs.
During the search investigations, many
10,000 crore to grape cultivators.
cases of availment and utilisation of The Supreme Court's decision dismiss-
8 November 2022 The Insurance Times