Page 8 - Insurance Times March 2016 Sample
P. 8
IRDAI
IRDAI chief wants simpli- Underwriting losses for general insurers rises 33% in
FY15
fied products distribu-
Underwriting losses for general insur- lines of business, such as group health,
tion in existing skeleton ers jumped 33 per cent to Rs. 10,127 motor and fire, due to increasing com-
crore in 2014-15 from Rs7,641 crore in petition among insurers.
The regulator has asked insurers to the previous year, according to IRDAI's
simplify the way annual report. IRDAI's annual report said that
insurance prod- specialised insurers (ECGC and Agricul-
ucts are distrib- Underwriting income is the
uted. "Insurers difference between premi- tural Insurance Company)
can bring in ums collected on insurance collectively reported signifi-
simplified distri- policies by the insurer, and cant increase in underwrit-
bution within expenses incurred and claims ing losses in 2014-15, which
paid out. stood at Rs. 428 crore as
the existing framework itself," said compared to underwriting
T. S. Vijayan, Chairman, IRDAI. K. G. Krishnamoorthy Rao, profit of Rs. 95 crore in
MD and CEO of Future Generali Insur- 2013-14.
Through regulations, such as man- ance, said that general insurance in-
agement of expenses and commis- dustry is seeing high underwriting Net incurred claims of non-life insurers
sions, IRDAI is trying to encourage losses as the pricing in the market is collectively increased by 12 per cent to
companies to roll out simplified dis- not adequate and is unviable in various Rs 55,232 crore in 2014-15 from Rs.
tribution structures. 49,179 crore in 2013-14.
He added that for simple products in- New reinsurance guidelines favouring GIC Re
surers can look at distributors, such
as point of sales persons, while IRDA has revised its regulations for the model the norms again. The current
agents can be trained more compre- reinsurers, giving preference to public rules grant parity to all parties, saying
hensively for selling more complex sector reinsurer GIC Re in the
products. domestic insurance sector. that every Indian insurer, in
order of priority, should first
When asked whether IRDAI is hav- "Every Indian insurer has to offer an opportunity to the
ing a re-look at the expenses man- offer its reinsurance business Indian reinsurer to partici-
agement circular, Vijayan said share- to Indian reinsurer and then pate in its reinsurance busi-
holders must take cognisance of the to other reinsurers like for- ness or a foreign reinsurer
expenses incurred by insurers. The eign reinsurers which are having which maintains a 50 per cent
IRDAI chief said unlike earlier where branches in India, Lloyd's and minimum retention or to other
insurers had to pay penalties for ex- reinsurers which are having branches Indian insurers.
ceeding their expense limits, the in special economic zone of GIFT in
current proposed provisions, such as Ahmedabad," IRDA said. However, the IRDAI regulations clarify that a foreign
restriction on opening new government representative on the reinsurer branch cannot cede more
branches, are likely to have a bigger IRDA board spoke against the revised than 50 per cent of its total reinsur-
impact. guidelines, forcing the IRDA to re- ance placements made outside India
with its parent company.
8 The Insurance Times, March 2016
