February 6, 2014
Public-sector non-life insurance companies are slipping in their market shares as they work to increase their revenues by focussing on large corporate accounts. This strategy has allowed their private-sector rivals to increase market share in profitable retail lines.
For instance, during the financial year ended March 2013, private insurers increased their market share in individual health insurance to 23 percent from the previous year’s 21 percent. In contrast, the four public-sector insurers that had a market share of 71 percent in 2011-12 saw it dip to 67 percent in 2012-13, reported the Financial Chronicle. The four state-owned insurers are New India Assurance, Oriental Insurance, United India Insurance and National Insurance.
Similarly, in personal accident insurance, which is another profitable segment, the private non-life insurers increased their market share to 57 percent in 2012-13, up from 48.75 percent in 2011-12. The public-sector non-life insurers saw their market share decline in personal accident to 40 percent in 2012-13 from 49 percent in 2011-12.
Mr Mukesh Kumar, head of strategic planning at HDFC Ergo General Insurance, told Financial Chronicle: “Post detariffing in 2007, the large private non-life insurers started focusing on profitable lines of business especially individual health, personal accident, home and liability insurance. In order to increase the topline, the public-sector insurers have been aggressive in group health and large corporate accounts for property insurance.”
According to the 2012-2013 annual report released by the Insurance Regulatory and Development Authority, the incurred claims ratio (ICR) for group insurance for the insurance industry was 104.4 percent, while that for individual policies, excluding family floater policies, was 90.2 percent. The ICRs for family floater policies and government sponsored health insurance schemes were 70.51 percent and 87.13 percent, respectively, for the industry.
In addition, private insurers exhibited better underwriting discipline in group business than the public-sector general insurers. For private non-life insurers, the individual insurance business was profitable with an ICR of 50 percent while the group health insurance business had an ICR of 92 percent. The public-sector general insurers reported an ICR of 110 percent for group health and 101.20 percent for individual business.