Expenses of General Insurers
The gross commission expenses of public insurers, private general insurers, standalone health insurers and specialized insurers stood at Rs. 3625 crore, Rs. 2306 crore, Rs. 664 crore and Rs. 7 crore respectively for 2016-17, cumulatively amounting to a total gross commission expense of Rs. 6602 crore for the general insurance industry. The gross commission expenses continued to be the highest in the health segment, which stood at Rs. 2650 crore, comprising Rs. 1281 crore for the public sector, Rs. 705 crore for the private sector and Rs. 664 crore for the standalone health insurance companies.
Commission expenses and operating expenses constitute a major part of the total expenses. The operating expenses of general insurance companies stood at Rs. 25594 crore in 2016-17 as against Rs. 23245 crore in 2015-16, showing an overall increase of 10.11 percent. The operating expenses of the public sector insurers, private general insurers, standalone health insurers and specialized insurers increased by 2.47 percent, 18.59 percent, 21.43 percent and 21.33 percent respectively over previous year.
Pursuant to the power given under Section 40B and 40C of The Insurance Laws (Amendment) Act, 2015 and in exercise of the power conferred under Section 114A of the Insurance Act, 1938 the Authority has issued IRDAI (Expenses of Management of Insurers transacting General or Health Insurance Business) Regulations, 2016. The said regulations are applicable for the financial year 2016-17.
During the financial year 2016-17, 6 private insurers were under exemption period. The period of five financial years shall be in addition to the first partial financial year. Out of balance 23 general insurers (excluding erstwhile HDFC Ergo General Insurance Co. Ltd. which got merged into L&T General Insurance Co. Ltd.), 18 general insurers were compliant and 5 general insurers were noncompliant to IRDAI (Expenses of Management of Insurers transacting General or Health Insurance Business) Regulations, 2016.
OPERATING EXPENSES GENERAL AND HEALTH INSURERS
(Rs. crore)
| Insurer Type | 2015-16 | 2016-17 |
|---|---|---|
| Public Sector Insurers | 12,528.44 | 12,838.19 |
| Private Sector Insurers | 9,018.00 | 10,694.19 |
| Standalone Health Insurers | 1,396.79 | 1,696.18 |
| Specialized Insurers | 301.47 | 365.79 |
| Total | 23,244.70 | 25,594.35 |
Note: Previous year Figures have been re-classified/regrouped by the insurers
Incurred Claims Ratio
The net incurred claims of the general insurers stood at Rs. 80662 crore in 2016-17 as against Rs. 64502 crore in 2015-16. The incurred claims exhibited an increase of 25.05 percent during 2016-17. The public sector insurers, private sector general insurers, standalone health insurers and specialized insurers reported an increase of 28.71 percent, 18.37 percent, 35.16 percent and 20.98 percent respectively in the incurred claims. The overall increase in incurred claims ratio during 2016-17 was at 25.05 percent, higher than 16.78 percent recorded during the previous year.
The incurred claims ratio (net incurred claims to net earned premium) of the general insurance industry was 90.91 percent during 2016-17 which is higher than the previous year figure of 85.06 percent. The incurred claims ratio for public sector insurers was 100.02 percent for the year 2016-17 which increased from the previous year’s incurred claims ratio of 89.03. Whereas, for the private sector general insurers, standalone health insurers and specialized insurers incurred claims ratio for the year 2016-17 was 79.10 percent, 56.47 percent and 120.22 percent respectively as compared to the previous year’s ratio of 80.18 percent, 58.20 percent and 100.54 percent respectively.
Among the various segments, Health insurance and Motor insurance had a high claims ratio at 101.05 percent and 88.17 percent respectively. The incurred claims ratio of the Motor Segment increased to 88.17 percent in the year 2016-17 from the previous year’s ratio 81.18 percent. However, incurred claims ratio of others segment had increased to 81.91 from previous year’s ratio of 75.91. However, the incurred claims ratio of Fire segment had increased to 84.38 from 74.44 in the previous year.
NET INCURRED CLAIMS:
GENERAL AND HEALTH INSURERS
(Rs. crore)
| Insurer Type | 2015-16 | 2016-17 | Growth 2015-16 | Growth 2016-17 |
|---|
| Public Sector Insurers | 38,104.27 | 49,043.19 | 20.71% | 28.71% |
| Private Sector Insurers | 21,771.81 | 25,771.04 | 12.05% | 18.37% |
| Standalone Health Insurers | 1,769.75 | 2,392.05 | 32.40% | 35.16% |
| Specialized Insurers | 2,856.57 | 3,455.87 | -1.40% | 20.98% |
| Grand Total | 64,502.40 | 80,662.14 | 16.78% | 25.05% |
Note: Figure in percentage indicate percentage growth over previous year
Investment Income: General and Health Insurers
The investment income of all general and health insurers during 2016-17 was Rs. 21730 crore (Rs. 19078 crore in 2015-16) registering a growth of 13.90 percent as against 14.88 percent in the previous year. During the year under review, the investment income of standalone health insurers has increased by 29.41 percent and private sector insurers and specialized insurers has grown at the percent of 24.62 and 8.81 respectively. On the other hand, the investment income for the public sector insurers had shown a growth of 9.00 percent.
INVESTMENT INCOME OF GENERAL AND HEALTH INSURERS
(Rs. crore)
| Insurer Type | 2015-16 | 2016-17 | Growth 2015-16 | Growth 2016-17 |
|---|---|---|---|---|
| Public Sector Insurers | 12,147.41 | 13,241.00 | 13.26% | 9.00% |
| Private Sector Insurers | 5,684.50 | 7,083.91 | 19.15% | 24.62% |
| Standalone Health Insurers | 241.34 | 312.32 | 35.16% | 29.41% |
| Specialized Insurers | 1,004.57 | 1,093.05 | 7.70% | 8.81% |
| Grand Total | 19,077.82 | 21,730.28 | 14.88% | 13.90% |
Note: Figures in percentage indicate growth rate (in percent) of the respective insurers
Profits After Tax (PAT)
During the year 2016-17, the total PAT of the General and Health insurance industry was Rs. 845 crore as against a profit of Rs. 3238 crore in 2015-16. The public sector companies reported a loss after tax of Rs. 2551 crore against a PAT of Rs. 1499 crore in 2015-16. The private sector insurers reported a PAT of Rs. 2763 crore against a PAT of Rs. 1333 crore in 2015-16 and specialized insurers have reported Rs. 606 crore PAT against a PAT of Rs. 583 crore in 2015-16 whereas the standalone health insurers reported Rs. 27 crore PAT against a loss after tax of Rs. 192 crore in 2015-16.
Out of four public sector insurers, two have reported PAT and two have reported loss after tax during the year 2016-17. New India reported a PAT of Rs. 1008 crore during the year 2016-17 against a PAT of Rs. 829 crore in 2015-16 and thus increased 21.59%. PAT of National has decreased to Rs. 46 crore from Rs. 149 crore in the year 2015-16, Oriental reported loss after tax of Rs. 1691 crore during 2016-17 against PAT of Rs. 300 crore in 2015-16.United India reported a loss after tax of Rs. 1914 crore during 2016-17 against the PAT of Rs. 221 crore during 2015-16.
Among the eighteen private general insurance companies, while fifteen companies reported PAT, the remaining three companies incurred losses after tax during 2016-17. The PAT of Bajaj Allianz during the year 2016-17 was Rs. 728 crore against PAT of Rs. 564 crore in the year 2015-16. The PAT of ICICI Lombard was Rs. 702 crore in 2016-17 against the PAT of Rs. 507 crore in the year 2015-16.The three insurers which reported losses after tax were Bharti AXA, Kotak Mahindra and Liberty Videocon. Out of six standalone health insurers, three have reported loss after tax and three have reported PAT during the year 2016-17. The three standalone health insurers which reported PAT during the year 2016-17 were Apollo Munich, Religare and Star Health. Apollo Munich, Religare and Star Health reported PAT of Rs. 132 crore, Rs. 2 crore and Rs. 118 crore respectively during the year 2016-17. Both the specialized insurers have reported PAT of Rs. 606 crore during the year 2016-17.
PROFIT AFTER TAX OF GENERAL AND HEALTH INSURERS
(Rs. crore)
| Insurer Type | 2015-16 | 2016-17 |
|---|---|---|
| Public Sector Insurers | 1,499 | -2,551 |
| Private Sector Insurers | 1,333 | 2,763 |
| Standalone Health Insurers | -177 | 27 |
| Specialized Insurers | 583 | 606 |
| Grand Total | 3,238 | 845 |
Returns to Shareholders
Of the four public sector General and Health insurance companies, none has paid dividends during the year 2016-17 against a dividend payment of Rs. 482 crore in the year 2015-16. In the year 2015-16 National Insurance, New India Assurance, Oriental Insurance and United India paid dividends of Rs. 45 crore, Rs. 250 crore, Rs. 120 crore and Rs. 67 crore respectively. Among the private sector insurers, three companies paid dividends during the year 2016-17. HDFC Ergo paid a dividend of Rs. 75.06 crore, ICICI Lombard paid a dividend of Rs. 157.10 crore and Shriram General paid a dividend of Rs. 25.85 crore.
GIC has not paid dividend during the year 2016-17 against Rs. 860 crore dividend paid during the year 2015-16. ECGC paid Rs. 73 crore during the year 2016-17 against Rs. 65 crore in the year 2015-16. No dividend was paid by AIC for the year 2016-17.
DIVIDEND PAID GENERAL, HEALTH AND REINSURERS
(Rs. crore)
| Insurer Type | Public Sector | Private Sector | Sub Total | Public Sector | Private Sector | Sub Total |
|---|
| 2015-16 | 2015-16 | 2015-16 | 2016-17 | 2016-17 | 2016-17 |
| General Insurers |
| Public Sector | 482 | NA | 729 | 0 | NA | 258 |
| Private Sector | NA | 247 | 729 | NA | 258 | 258 |
| Standalone Health Insurers |
| Public Sector | NA | NA | 0 | NA | NA | 0 |
| Private Sector | NA | 0 | 0 | NA | 0 | 0 |
| Specialized Insurers |
| Public Sector | 65 | NA | 65 | 73 | NA | 73 |
| Private Sector | NA | 0 | 65 | NA | 0 | 73 |
| Reinsurers |
| Public Sector | 860 | NA | 860 | 0 | NA | 0 |
| Private Sector | NA | 0 | 860 | NA | 0 | 0 |
| Branches of Foreign Re-insurers | NA | 0 | 860 | NA | 0 | 0 |
| Grand Total | 1,654 | 331 |
NA:- Not Applicable
Courtesy : IRDA Annual Report
