Page 40 - Life Insurance Today March 2016
P. 40
Insurance Regulatory
And Development
AuthorityNews
IRDAI chief wants simpli- Underwriting losses for general insurers rises 33% in
fied products distribution FY15
in existing skeleton Underwriting losses for general insur- ous lines of business, such as group
ers jumped 33 per cent to Rs. 10,127 health, motor and fire, due to increas-
The regulator has asked insurers to crore in 2014-15 from Rs7,641 crore ing competition among insurers.
simplify the in the previous year, according to
way insurance IRDAI's annual report. IRDAI's annual report said that
products are specialised insurers (ECGC and Agricul-
distributed. "In- Underwriting income is the
surers can bring difference between premi- tural Insurance Company)
in simplified ums collected on insurance collectively reported signifi-
distribution policies by the insurer, and cant increase in underwrit-
expenses incurred and ing losses in 2014-15, which
within the existing framework it- claims paid out. stood at Rs. 428 crore as
self," said T. S. Vijayan, Chairman, compared to underwriting
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 insur-
sions, IRDAI is trying to encourage losses as the pricing in the market is ers collectively increased by 12 per
companies to roll out simplified dis- not adequate and is unviable in vari- cent to Rs 55,232 crore in 2014-15
tribution structures. from Rs. 49,179 crore in 2013-14.
He added that for simple products New reinsurance guidelines favouring GIC Re
insurers 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 having "Every Indian insurer has to offer an opportunity to the
a re-look at the expenses manage- offer its reinsurance business Indian reinsurer to partici-
ment circular, Vijayan said sharehold- to Indian reinsurer and then pate in its reinsurance busi-
ers must take cognisance of the ex- to other reinsurers like for- ness or a foreign reinsurer
penses incurred by insurers. The eign reinsurers which are hav- which maintains a 50 per
IRDAI chief said unlike earlier where ing branches in India, Lloyd's and cent minimum retention or to
insurers had to pay penalties for ex- reinsurers which are having branches other Indian insurers.
ceeding their expense limits, the cur- in special economic zone of GIFT in
rent proposed provisions, such as Ahmedabad," IRDA said. However, the IRDAI regulations clarify that a foreign
restriction on opening new branches, government representative on the reinsurer branch cannot cede more
are likely to have a bigger impact. IRDA board spoke against the revised than 50 per cent of its total reinsur-
guidelines, forcing the IRDA to re- ance placements made outside India
40 with its parent company.
March 2016 Life Insurance Today
