Executive Summary: De-tariffing'' to increase insurers'' underwriting losses
07 November 2006
In contrast, returns from severely loss-making segments such as motor third-party (motor TP) insurance are likely to improve, as industry players increase premium rates to cover future expected claims more efficiently than the current practice.
CRISIL's analysis of the expected scenario post de-tariffing reveals that overall, underwriting losses will increase from the current levels as the benefits from the increase in Motor TP premium are not expected to be sufficient to completely offset the impact of the reduction of premium levels in the profitable segments. Thus CRISIL expects the core business operations of industry players to remain unprofitable over the medium term.
Nevertheless, the strong capitalisation levels of general insurance companies will continue to support their business and financial profiles in a de-tariffed regime. This will enable them to meet unexpected losses and service large claims that may devolve on them.
The Indian General Insurance Industry: An Overview
| Historically, the domestic general insurance industry has been dominated by a few public sector players. Private sector players, who entered the market as recently as in 2001-02 , had garnered a sizable market share of about 26.6 per cent of the domestic gross premia by 2005-06.Despite this intensifying competition, public sector players continue to dominate the Indian general insurance market, given their long track record, extensive reach, and robust capitalisation levels. 
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