Corporate insurance rates crash amid growing competition

Mumbai: The commercial insurance market is seeing a steep drop in premiums as insurers aggressively cut rates to win big corporate clients, potentially exposing the sector to losses in case of 'adverse events' and questioning commercial viability of the renegotiated covers.

Prices for property and industrial covers have fallen sharply - natural catastrophe covers are discounted by 60-75%, and preferred risks by as much as 85-90%, industry executives said. Large renewals are coming in much cheaper- for example, a pharma client that paid around '22 crore last year has renewed for about '6 crore. Industry executives have described the new pricing as "bloodbath" and warn that such deep discounting may not be sustainable if major claims or catastrophe losses occur.

"Prices are falling low in the commercial lines," said an industry executive involved in underwriting large commercial accounts. "Last year, we had one renewal where the premium paid was over '11 lakh. This year we quoted '4.5 lakh and still lost the business," he said, without mentioning the account. Insurers are offering steep discounts across core property lines such as fire and natural catastrophe covers-including earthquake and storm, tempest, and flood (STF) risks.