Non-life insurance companies are struggling to bring their management expenses -wages, dividends and commissions – under the prescribed limit.
Management ratio, or the portion of gross direct premium collection that is utilized for meeting management outlay, was over 24% of the gross premium collected a year ago for non-life insurers, and projected to slide to about 22% this year –still well above the 19.5% prescribed by section 40C of the Insurance Act.
State-owned, Oriental Insurance, New India Assurance, National Insurance and United India Insurance are seeing a drop, albeit just 3-5%, in their management ratios this fiscal.
Experts say that adopting strategies like revision in prices and commission helped the state-owned insurers. Also, in line with the finance ministry’s directives, they steered clear of loss-making portfolios, and cut their exposure to select group health policies. They revised prices in segments like third party and group health policies.
Insurance Regulatory and Development Authority (IRDA), on its part, raised motor third party premiums by 30% in March. It also allowed a few general insurers to modify the prices in segments like retail, group health and property policies.
But, private sector non-life insurers have not been as successful. Private players need to wait till their business picks up. As the business grows, their expenses will come down.
