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Wednesday, December 29, 2010

Private life insurers fail to meet break-even targets

MUMBAI: The Insurance Regulatory and Development Authority (Irda) in its annual report has said private life insurers have failed to meet the breakeven targets indicated by them at the time of seeking a licence. However, companies have started taking corrective action and have reduced their operating expenses considerably.
According to Irda, the experience of the insurance markets globally indicates that companies in the life sector take 7-10 years to break even. In India, several insurance companies will complete 10 years of operations in the current fiscal.

The regulator has pointed out that the increase in expenses was largely because of the insurance companies’ inability to control procurement costs.What made things worse was that lapse rates affected profitability and rendered all pricings insufficient. On the positive side, death claims have been few, and companies have not had an adverse experience.
The other bright spot is that companies are now focusing on cutting costs. Operating expenses, as a percentage of gross premium underwritten, have declined sharply for private insurers from 25.99 % in 2008-09 to 20.86 % in 2009-10 . For the industry as a whole, the operating expenses ratio declined from 11.65 % in 2008-09 to 10.85 % in 2009-10 .
 During 2009-10 , out of the 22 private life companies, seven revealed profit after tax as compared to four in the previous two years. Of the seven companies which reported profit in 2009-10 , three companies showed profits continuously for the past two years.

The eight companies that have reported profits in 2009-10 include LIC, ICICI Prudential, Kotak Mahindra, SBI, MetLife, Bajaj Allianz , Sahara India and Aegon Religare.


http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/private-life-insurers-fail-to-meet-break-even-targets/articleshow/7142703.cms?curpg=2

1 comment:

  1. Nice article from ET.
    Gud guys. keep on updating.

    Garvit

    ReplyDelete