Most new non-life insurance firms are rejecting insuring commercial vehicles in order to control the loss claim ratios at 72 per cent. The public sector insurance industry suffers an annual net loss of Rs 1,200 crore with the loss claim ratio pegged at 140 per cent.
State insurers claim that losses in the private vehicle segment is low, but this is offset by the high claim ratio in the commercial segment, due to frequently inflated bills and third party claims. Motor liability claims have bled the Indian insurers for decades. However, the truckers lobby has prevented any hike in the motor insurance premium.
New players also admit that the claim ratios in motor insurance will be high. "The claim ratio for the new players will be 70 to 72 per cent for two wheelers and private cars," said Bajaj Allianz General Insurance Company chief operating officer Kamesh Goel.
Royal Sundaram Alliance Insurance Company (RSA) in its latest tie-up with the Fiat Sundaram Auto Finance (Fisaf) to insure Fiat new models, will refrain from insuring Fiat taxis. "We will be willing to insure existing Fiat customers, but will not insure Fiat taxis," said Fisaf's commercial head Shridhar Iyer.
While new players have the ability to reject business, state entities do not have this luxury. Most of the new players have been writing business through banks and other establishments, which by themselves already undertake some sort of screening. RSA has strategic alliances with ABN Amro, American Express, Sundaram Finance, Standard Chartered Bank, Citibank and Fisaf.
