(From left): National Insurance CMD V. Ramasaamy, C.K. Dhanuka, chairman of Ficci (eastern region), and Oriental Insurance CMD M.Ramadoss in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, May 9: General insurance companies have not resorted to undercutting since the segment was detariffed in January.

This was pointed out by the chiefs of PSU insurers National Insurance and Oriental Insurance at a Ficci seminar here today.

“Since detariffing in January, there have been no bloodbaths and no price wars in the sector,” V. Ramasaamy, the CMD of National Insurance Company, said. Similar views were echoed by Oriental Insurance CMD M. Ramadoss, who said despite the apprehensions of the IRDA, the market had behaved well.

However, there was no guarantee that it would continue to do so in the future, he added. Ramadoss said detariffing has led to a situation where the PSU insurers must seriously develop under-writing skills .

General insurers are now free to fix their own premiums and devise underwriting policies in segments such as fire insurance, engineering insurance and workmen’s compensation policies.

The cap on premiums existed since the sector was opened up to competition and even before when the PSU insurers had a monopoly of the market.

Massive decline in insurance premiums are normal up to 18 to 24 months after detariffing.

The growth rate in premiums of private companies in fire insurance is 2.58 per cent in the fourth quarter.

In engineering, the growth rate is 88.1 per cent among private companies and 108.2 per cent among the PSUs.

In third party motor insurance, the growth rate is 173 per cent in the private sector and 29.8 per cent among the PSUs.

“For fire and engineering we have been able to protect our revenues by convincing customers to go for wider coverage,” Ramasaamy said.

Insurance made easy

A move is on to communicate easily with the common man the terminology used by the general insurers.

From the next fiscal, companies can issue their guidelines in a simple one-page document, in contrast to the present norm of four-five page guidelines that are suffused with jargons.

Both Ramadoss and Ramasaamy advised customers to pick the right intermediary and avoid multiple broker authorisations.

They said customers should pick up the better products in a falling price market.

The focus must be on risk management, improvement and transfer in portfolios with emphasis on awareness rather than cost.

Ramadoss said demand-driven policies were on their way from the next fiscal.

Meanwhile, life insurance recorded a growth of 110 per cent in the last fiscal.

The industry leader LIC expanded its market share to 74.1 per cent, compared with 6.9 per cent of its closest rival Icici Prudential.

Riding high on aggressive marketing and innovative products, the sector's collective new business gains — the first premium collections — more than doubled to Rs 75,406.52 crore at the end of fiscal ended March 31, from Rs 35,897.96 crore a year ago, according to the IRDA.