 "Fire & engineering segment sees drop in rates")
In order to attract more clients, general insurers have started offering up to 40 per cent discounts in insurance premium rates for the fire and engineering segment.
This segment largely covers manufacturing plants and large-scale industrial projects from fire and other risks associated with construction and maintenance. Other than manufacturing, fire and engineering policies are offered to sectors such as auto, oil & gas, power, and infrastructure.
With the manufacturing industry bogged down with lesser manufacturing activity and slower take-off of new projects, new policies have taken a hit.
According to industry experts, there had been a 20-30 per cent drop in the number of new projects covered under fire and engineering policies.
Due to a slower industrial production, the number of new projects has also seen a decline, said the general manager of a public general insurer.
“Since not many new projects are coming up, there is a scramble to retain existing customers and attract those from other insurers. Hence, insurers are going aggressive on this segment,” said the underwriting head of a private general insurer.
According to industry insiders, after the fire and engineering segment was de-tariffed (price control was removed) in 2007, some areas have seen even a 90-95 per cent drop in rates, making the businesses unviable.
Non-life insurance players justify the drop in premiums saying the clients would not stick to them unless they are given incentives. “At a time when there is not much industrial activity, it is imperative that we offer some discounts so that clients do not go to rival companies. Otherwise, our fire-engineering portfolio will show de-growth (decline),” said the senior executive of a mid-sized private general insurer.
Industry officials expect the situation to continue until after the general elections. The senior official of a private general insurance firm said the momentum of project insurance will not pick up till mid-August 2014, since infrastructure and engineering companies are also waiting for the new government to be elected before taking a decision on setting up a project.
According to data from the Ministry of Statistics and Programme Implementation, industrial production shrank by 0.6 per cent in December 2013 against 1.3 per cent in the previous month, the third straight month of contraction.
Manufacturing, which has a weight of over 75 per cent in the Index of Industrial Production, continued to decline in December 2013 by 1.6 per cent, compared with 2.6 per cent in the previous month. Manufacturing was down 0.8 per cent in December 2012.
The underwriting losses in non-life insurance companies decreased to Rs 6,984 crore in 2012-13 from Rs 8,827 crore in the previous year.
This segment largely covers manufacturing plants and large-scale industrial projects from fire and other risks associated with construction and maintenance. Other than manufacturing, fire and engineering policies are offered to sectors such as auto, oil & gas, power, and infrastructure.
With the manufacturing industry bogged down with lesser manufacturing activity and slower take-off of new projects, new policies have taken a hit.
According to industry experts, there had been a 20-30 per cent drop in the number of new projects covered under fire and engineering policies.
Due to a slower industrial production, the number of new projects has also seen a decline, said the general manager of a public general insurer.
“Since not many new projects are coming up, there is a scramble to retain existing customers and attract those from other insurers. Hence, insurers are going aggressive on this segment,” said the underwriting head of a private general insurer.
According to industry insiders, after the fire and engineering segment was de-tariffed (price control was removed) in 2007, some areas have seen even a 90-95 per cent drop in rates, making the businesses unviable.
Non-life insurance players justify the drop in premiums saying the clients would not stick to them unless they are given incentives. “At a time when there is not much industrial activity, it is imperative that we offer some discounts so that clients do not go to rival companies. Otherwise, our fire-engineering portfolio will show de-growth (decline),” said the senior executive of a mid-sized private general insurer.
Industry officials expect the situation to continue until after the general elections. The senior official of a private general insurance firm said the momentum of project insurance will not pick up till mid-August 2014, since infrastructure and engineering companies are also waiting for the new government to be elected before taking a decision on setting up a project.
According to data from the Ministry of Statistics and Programme Implementation, industrial production shrank by 0.6 per cent in December 2013 against 1.3 per cent in the previous month, the third straight month of contraction.
Manufacturing, which has a weight of over 75 per cent in the Index of Industrial Production, continued to decline in December 2013 by 1.6 per cent, compared with 2.6 per cent in the previous month. Manufacturing was down 0.8 per cent in December 2012.
The underwriting losses in non-life insurance companies decreased to Rs 6,984 crore in 2012-13 from Rs 8,827 crore in the previous year.