Page 7 - The Insurance Times March 2025

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amount collected in a financial year.
Strict action against Corruption in Crop Insurance: For instance, if the incurred claim ra-
Shivraj tio of an insurance provider is 75 per
cent, then it means that the insurer
Agriculture minister Shivraj Singh Chouhan assured Lok Sabha govt was com-
mitted to taking action against anyone found guilty of corruption in the crop pays Rs. 75 towards claim payment for
insurance scheme - PM Fasal Bima Yojana. every Rs. 100 of premium collected
and the remaining Rs. 25 is considered
The minister was responding to a question by Supriya Sule of NCP (SP) alleg- as profit for the insurance company.
ing corruption of Rs 5,000 crore in Maharashtra related to the crop insur-
ance scheme. Sule quoted the Maharashtra agriculture minister saying there Meanwhile, earlier this year, IRDAI
was Rs 500 crore worth of irregularities in the scheme. She added the min- had repealed its guidelines capping the
ister was corrected by a BJP MLA who had claimed it was a Rs 5,000 crore commission for long-term motor insur-
corruption scandal and not just Rs 500 crore. Chouhan said there was no ance policies, aligning these policies
such report available with the Centre, adding no one will be spared if found with the standard one-year motor in-
guilty. surance policies. Insurers can now of-
fer commissions within the expense of
management for long-term policies.
Private insurers show 2024 as against Rs. 4,890 crore in Total commission expenses incurred by
FY2023 while securing fresh busi-
239% jump in motor com- private players for all categories, in-
nesses. Interestingly, public sector in-
mission payouts to Rs. surers kept away from the 'commission cluding health, motor, marine and fire,
were at Rs. 26,235 crore in FY24 as
16,578 crore game' and reported only 31.59 per against Rs. 10,192 crore. PSU players'
cent rise in commission expenses at Rs.
Despite concerns raised by the IRDAI, 3,099 crore in FY2024 as against Rs. expenses were at Rs. 7,359 crore (Rs.
private sector general insurers re- 2,355 crore in FY2023, according to 6,340 crore).
ported a 239 per cent jump in commis-
the Annual Report of the IRDAI. MISPS were reportedly charging high
sion expenses in the motor insurance
When it comes to incurred claims ra- commissions of over 50 per cent for
segment in fiscal ended March 2024.
tio, public sector insurers led with new private car insurance policies.
Interestingly, private insurers lagged
99.57 per cent while private players What is significant is that high commis-
behind public sector counterparts with
were far behind with a figure of 73.30 sion to MISPS will inflate the insurance
a low claims ratio.
per cent, according to the IRDAI re- premium being paid by the car buyers.
Private insurers shelled out a whopping port. If an MISP charge Rs. 45,000 insurance
Rs. 16,578 crore to motor insurance Incurred claim ratio refers to the total on a Rs. 12 lakh car, the same policy
service providers (MISPs) as commis- claim amount paid by the insurance could cost just Rs. 20,000 if taken from
sion during the fiscal ended March company in ratio to the total premium the market.

The Insurance Times March 2025 7