Third party motor insurance losses may fall below 100% with higher premium proposal

KOLKATA: The state-run National Insurance Co, the country’s third largest general insurer, said third party losses under motor insurance may fall below 100% for the time if insurers raise third party premium by about 25-30% from April following a proposal by the insurance regulator.

K Sanath Kumar, the new chairman and managing director of Kolkata-based National Insurance, said that the impact of higher premium would be felt in the next two years.

The Insurance Regulatory & Development Authority of India (IRDAI) has proposed is raise third party premium for commercial vehicles by 25-30%, while third party premium for private cars with engine capacity not exceeding 1,000cc such as Maruti Suzuki and Tata Nano would be 30% more expensive.

The IRDAI draft said third party premium may rise 10-15% for two-wheelers with an engine capacity below 350cc. Third party motor insurance is mandatory for every vehicle owner.

However, Sanath Kumar in his first interaction with the media after assuming new responsibility said the insurer would continue to suffer underwriting losses this fiscal. He said that the company is expecting a modest 10-12% profit this fiscal as the investment income has not grown substantially due to adverse market condition.

It earned a profit before tax of Rs 1196 crore in 2014-15 on a premium income of Rs 11,235 crore.

“Retail business has been our focus and we have every product in our bouquet except agriculture insurance. We are now planning to cross sell products aggressively to existing customers,” the CMD said.

The insurer is planning to boost data analytics to boost sales. “We would like to map customer behavior for effective marketing of our products,’ he said.

Health and motor insurance contributes four-fifth of its business.