Profits of the four nationalised non-life insurance companies have more than halved within a span of three years from Rs 920 crore in 1997-98 to Rs 390 crore in 2000-01. In 2001-02, the four insurers registered a marginal loss, putting many in the red.
According to a study undertaken by Crisil, the four companies have witnessed a steady decline in their profitability on account of rising claims and consequent underwriting deficits as well as falling investment returns.
This trend is partially in keeping with most global insurers, most of whom have reported an underwriting deficit.
More From This Section
This follows the combined ratio comprising claims and expenses having exceeded premium collections. Profitability is thus dependent upon investment returns.
Crisil in its study of the four state insurers while pointed out that the solvency position is a redeeming factor,