According to the report of a leading credit rating and information agency, CRISIL, insurers may have to provide additional Rs 6,500 crore in the third-party (TP) motor pool to comply with the insurance regulator IRDA’s directive.
“We estimate the additional provisionary at Rs 65 billion this time, which is more than twice the provisionary increase that followed IRDA’s rate hike of March’ 2011,” said Rupali Shanker, Director, CRISIL.
Recently, the Insurance Regulatory and Development Authority has increased the provisioning requirements in the third-party motor pool. The extra provisioning in the motor third-party pool coupled with high claims in the motor third-party and health insurance would impact the underwriting performance in the interim.
Industry’s overall underwriting loss is expected to exceed Rs 100 billion each in 2011-12 and 2012-13.
The Credit Rating and Information Services of India expects an annual hike in premium rates for the motor third-party segment to benefit the industry over the long term. Consequently, the underwriting losses in motor TP segment, which has the most adverse claims performance likely to reduce over time.
http://www.insuringindia.com/News/SBI-Life-registers-a-record-profit-of-Rs-556-crore.aspx
