After a long while, private sector non-life insurers recorded a drop in premium collections in April on account of competitive pricing from public insurers.
According to industry sources, new business premium for private insurers shrank for the first time since the sector was opened to private players, by 1 per cent in April to Rs 1,561.4 crore, as against Rs 1,578 cr in April 2008.
By the provisional data, the industry grew at 7.2 per cent in the month, while public insurers grew by 8 per cent.
“Private players have been more cautious in writing risks and this is reflected in the premium collection. Also, the group health portfolio has been significantly bleeding. We are going slowly by our choice,” said ICICI Lombard Director - Corporate Centre and CFO Rakesh Jain.
Till March 2009, private players were growing faster than their public sector counterparts, but lost momentum on April 1, when almost 30 per cent of the corporate policies are renewed.
Private insurers blame pricing and the liberal risk perception of the public players for the poor performance.
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“Companies have realised that prices are at rock-bottom. There is difference in the way risk is perceived by a public and a private insurer.
“But we have to see whether the growth is sustainable,” said a senior executive of a large private insurance company.
Amid pricing pressure from the state-owned players, private biggies like ICICI Lombard, Bajaj Allianz and Reliance Life reported a drop in premium collection of 21.8 per cent, 15.6 per cent and 21 per cent, respectively.
“We expected the rates to harden since April, but to our surprise we saw the price fall further by 20-25 per cent in the fire and engineering segment, putting pressure on the private players,” said another executive who did not wish to be quoted.
The premium collection of Tata AIG shrank marginally by 0.36 per cent in April 2009, as compared to April 2008