Rating firm Crisil has projected underwriting loses of the domestic general insurance companies at Rs 10,000 crore in the 2010-11 fiscal. We estimate the industrys underwriting losses to increase significantly to more than Rs 10,000 crore in 2010-11 from Rs 5,900 crore in 2009-10, Crisil Ratings director Pawan Agrawal said in a statement. This increase reflects weak underwriting performance,increase in reserving requirements for each of the past four years on the TP motor insurance pool,and wage revisions in public-sector insurance companies, Agrawal added. The rating agency however,said that the recent hike in the third-party (TP) motor insurance premiums by the insurance regulator IRDA would improve the underwriting performance in 2011-12. From today,TP motor insurance premiums have increased by 10 per cent for private cars and two-wheelers and 68 per cent for goods and passenger vehicles. We view the rate hike in the TP motor insurance as a step towards containing the general insurance industrys mounting underwriting losses, Crisil Ratings head Rupali Shanker said. The hike in the rates would improve the general insurance industrys combined ratio to around 110 per cent in 2011-12,from an estimated 132 per cent in 2010-11. A high combined ratio indicates weak underwriting performance. A combined ratio of more than 100 per cent indicates underwriting losses. Third-party motor insurance is the only segment in the general insurance category whose tariffs are regulated.
