Page 16 - Insurance Times March 2016 Sample

International
UK's car insurance pre-
mium rates set to rise
According to a new report by
Timetric,
the private
motor insur-
ance market
has seen
premium rate increases throughout
2015, and the upward trend in car
insurance prices is forecast to con-
tinue into 2016.
Higher car insurance premiums, to-
gether with the high cost of claims,
are expected to lead to a recovery
in premium volumes from 2015 on-
wards. Motor insurance gross writ-
ten premiums declined by 10.6% in
2013, further dropping by 2.1% to
GBP 8.2 billion in 2014. The decline
was due to growing competition and
the government's measures to com-
bat false or exaggerated whiplash
claims, which led to a significant drop crore, were aired, yet analysts were
in premium rates.
Looking forward, the category is ex-
pected to remain stable, registering
a CAGR of 1.1% and reaching GBP
8.9 billion in the next five years.
Strong competition and the rise of
aggregators, as well as regulatory
pressure to lower premiums, is ex-
pected to restrict price increases in
the category.
16 The Insurance Times, March 2016

The FDI limit change was a game changer
In February 2015, when the Insurance they felt that Indian management con-
Laws (Amendment) Act was passed, trol could be a dampener - with a
the cap on foreign ownership of Indian higher stake, the foreigners were
insurers was raised from 26 per cent bound to ask for more.
to 49 per cent. It was widely believed
that it would open the sluice gates for At least 12 insurance companies have
foreign investment in the capi- sent their applications to the Foreign
tal-starved sector. However, a
new term in the rule book, Investment Promotion Board
"Indian management con- (FIPB) to increase the stake
trol", began to haunt the in- held by their foreign partners.
dustry.
In December 2015, AXA in-
The FDI limit change was creased its stake in Bharti AXA
meant to be a game changer. Life Insurance and Bharti AXA
But doubts persisted over General Insurance to 49 per
control and Indian management. Some cent after receiving approvals
interpreted it as no foreigner would be from FIPB and the Insurance
allowed to be a part of an insurer's top Regulatory and Development Author-
management, while others saw it cur- ity of India (IRDAI).
tailing their voting rights.
Amitabh Chaudhry, MD & CEO of HDFC
Several estimates of FDI inflows, rang- Life, says clarity from the regulator on
ing from Rs 20,000 crore to Rs 30,000 Indian management control has
helped insurance companies, and now
reluctant to provide timelines, because more of them are going to FIPB for
approval of a higher foreign stake.
GIC plans to increase global premium
GIC Re plans to increase its global premium by operating in more geographies
and increasing capacities over select lines of business, a top
company official said. "Our operations in Dubai, Kuala Lumpur
and London are poised to grow in business and profits. In
India, we are prepared for the new brand of competition that
would develop, as reinsurers would set up new branches and
Lloyd's market would start operating from next financial
year," said GIC Re acting Chairman and Managing Director Sanath Kumar. The
domestic market will soon see major reinsurers starting their business once IRDAI
finalises relevant regulations, he said.