The state-run general insurance companies have formalised a blueprint to keep out new players from eating into their premium income.
A war has been declared on the new players who have adopted an aggressive stance and are capturing the market share of the four state insurance companies -- New India Assurance Company, National Insurance Company, United India Insurance Company and Oriental Insurance.
By forming a cartel through General Insurers' (Public Sector) Association of India (Gipsa), the four insurers propose to adopt "uniform rates and terms to ensure that the business is not diverted to another company at lower than warranted rates."
Gipsa members met on May 18, where the chairmen-cum-managing directors and the general managers (technical) of the four General Insurance Corporation subsidiaries decided that market agreements and other underwriting instructions issued to date will continue, said sources at Gipsa.
The state-owned general insurance companies are feeling the heat as private insurance companies are making beelines to capture their corporate accounts by offering more competitive rates.
State insurers lost Rs 55 crore of premium in a single shot when Tata AIG General Insurance offered better terms to the state-owned Karnataka Power Corporation.
Bajaj Allianz also captured an existing account when it wrote its first 'industrial all risk policy' for the 200,000-tonne steel unit of ThyssenKrupp Stah, the German steel major which acquired Raymond's speciality steel unit in Nasik last year.
The capturing of the state insurers' pie by new players triggered off the Gipsa meeting late last month when the four chiefs arrived at a consensus that uniform rates and terms when warranted should be binding on all Gipsa members.
Tata AIG General has been aggressive in garnering the Tata group business in parts. Officials said, "We have underwritten some business for some of the companies in the Tata group, including Telco."
Public sector insurance companies anticipate a loss of Rs 400 to 500 crore in premium income from corporate clients during the current fiscal, as renewal notices are being sent out.
