NEW DELHI, MAY5 : Hit by the detariff regime that kicked in on January 1, 2007, the general insurance industry has witnessed a sharp 33 per cent dip in new premium collections in fiscal 2007-2008 compared with the amount collected in the previous financial year. Insurance Regulatory and Development Authority (IRDA) had given general insurance companies near-complete freedom to price their motor, fire and engineering policies from January 1 last year. These three segments account for over 70 per cent of the total non-life business in the country.

Fourteen general insurers — 10 private and four public sector players — together collected Rs 3,133 crore in FY08 compared with Rs 4,682 crore during FY07. The fierce price war took the biggest toll on the state-owned general insurers, which between them hold a 60 per cent market share. Their collections plummeted almost 55 per cent to Rs 621 crore from Rs 1,389 crore in FY07. Private sector players garnered Rs 2,512 crore new premiums in FY08, down 23 per cent compared with Rs 3,293 crore in FY07. While all four general insurance companies in the public sector space registered a fall in new premium collections, three of the 10 private players managed to stay afloat and actually mark an increase in collections.

“This was anticipated. All across the world, whenever there is a relaxation in the pricing regime, new premium collections are hit,” says Bajaj Allianz General Insurance Company corporate communications head Santosh Balan. His company is one of the three that managed to post higher new premium collections by cherry picking clients based on their risk-based profiling. HDFC Chubb, Reliance General and Cholamandalam General Insurance were the other three private companies that bucked the trend.

Harsh Roongta, CEO of apnainsurance.com, one of the country’s insurance portals, said, “Detariffing leads to fall in premiums, which primarily arises from increased competition. So, the key figure to watch out for is the amount of risk covered and not just the new premium collections.”

ICICI Lombard, which enjoys a 30 per cent share in the private pie, faced the biggest drop of 75 per cent in new premium collections. Iffco Tokio, the fourth biggest among private insurers with a market share of 17 per cent, also saw a dip of over 66 per cent in new premium collections.

The second biggest player in the private sector, Reliance General, clocked a rise of nearly 38 per cent. Commenting on the rise, Reliance General Insurance CEO Soma Sekharan said, “Our key growth drivers have been health, motor and property insurance which contributed maximum growth last financial year.”