Public sector general insurers have fallen short of targets to cut underwriting losses in the motor insurance sector, according to M. Ramadoss, Chairman, General Insurers Public Sector Association (GIPSA), and Chairman and Managing Director of New India Assurance Company (NIACL).
Speaking to The Hindu, Mr. Ramdoss said this was because the Insurance Regulatory and Development Authority (IRDA) and the Government have not allowed public sector companies increase motor liability premia in line with actuarial requirements. Underwriting losses arise because insurers' expenditure on claims and management are higher than premium collections.
Last August, public sector insurers had signed a statement of intent (SoI) with the Finance Ministry to reduce losses. Mr. Ramdoss said the insurance companies “have fallen short of the SoI targets.”
Mr. Ramadoss said underwriting losses of New India Assurance was expected to be 117 per cent of the premiums collected in 2009-10.He said IRDA's reluctance to allow “a free pricing regime” in commercial motor third party premiums was the main reason for the high losses.