Underwriting losses to cross Rs100 bn in 2010-11: CRISIL news
25 April 2011

CRISIL expects the recent rate hike in third-party (TP) motor insurance premiums by Insurance Regulatory Development Authority of India (IRDA) to improve the underwriting performance of the Indian general insurance industry in 2011-12.

The rate hike is expected to significantly improve the general insurance industry's combined ratio to around 110 per cent in 2011-12 from an estimated 132 per cent in 2010-11 (a high combined ratio indicates weak underwriting performance. In other words, a combined ratio of more than 100 per cent indicates underwriting losses).

Third-party  motor insurance is the only segment which is tariffed in the Indian general insurance industry.

Because of the highly adverse claims experience in this segment, IRDA has recently announced an increase of 10 per cent in insurance premiums for private cars and two-wheelers and 68 per cent for goods and passenger vehicles.

Says Rupali Shanker, head, CRISIL Ratings, ''We view the rate hike in the TP motor insurance segment as an important step towards containing the general insurance industry's mounting underwriting losses. We expect the industry's combined ratio to improve to 110 per cent in 2011-12 on the back of this rate revision''.

CRISIL's expectation of improvement in the combined ratio in 2011-12 also factors in the expectation that the underwriting performances of segments other than third-party motor insurance will remain at current levels.

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Underwriting losses to cross Rs100 bn in 2010-11: CRISIL