General insurance rates are set to go up in the coming fiscal. With all-time low tariff rates, general insurance companies are considering reducing the discount rates on renewals of industrial fire and engineering policies from April.
Instead of offering across-the-board discount, insurers this year will try to negotiate with corporate policyholders in areas such as deductibles and add-on covers, according to industry experts. Deductibles are the portion of claims borne by policyholders.
The first day of the new financial year is a preferred renewal date for most large industrial houses, with nearly 25-40 per cent of group renewals in a year taking place on the day.
“With the reinsurance rates expected to go up in some policies, price discount may not be the preferred choice year. If the price cut is checked and deductibles increased, the claims ratio could come down in 2010-11,” Mr Alok Agarwal, Director (Corporate), ICICI Lombard, said. Claims ratio in these (fire, engineering) policies are now currently in the range of 70-80 per cent, up from about 40 per cent during the tariff-era.
“The general insurance industry is slowly moving towards better pricing. We may see a check on indiscriminate discounting with the concessions to some corporates being reduced from nearly 90 per cent to about 50 per cent,” Mr Rahul Agarwal, CEO, Optima Insurance Broking, said.
Add-on covers would serve as a selling point during renewals, Mr Alok Agarwal pointed out. The Insurance Regulatory and Development Authority of India recently allowed clubbing of add-on covers with main policies.
Some of the important add-on covers on offer are compensation for damage of employee belongings, civil infrastructure, customer goods lying in factory premises and overhead cost of shutting down plants.
A senior official at National Insurance Company, however, said, “Add-ons cannot become the unique selling point because all insurers would be offering the same set of benefits.” Group insurance business would continue to be price driven, he added.
Instead of offering across-the-board discount, insurers this year will try to negotiate with corporate policyholders in areas such as deductibles and add-on covers, according to industry experts. Deductibles are the portion of claims borne by policyholders.
The first day of the new financial year is a preferred renewal date for most large industrial houses, with nearly 25-40 per cent of group renewals in a year taking place on the day.
“With the reinsurance rates expected to go up in some policies, price discount may not be the preferred choice year. If the price cut is checked and deductibles increased, the claims ratio could come down in 2010-11,” Mr Alok Agarwal, Director (Corporate), ICICI Lombard, said. Claims ratio in these (fire, engineering) policies are now currently in the range of 70-80 per cent, up from about 40 per cent during the tariff-era.
“The general insurance industry is slowly moving towards better pricing. We may see a check on indiscriminate discounting with the concessions to some corporates being reduced from nearly 90 per cent to about 50 per cent,” Mr Rahul Agarwal, CEO, Optima Insurance Broking, said.
Add-on covers would serve as a selling point during renewals, Mr Alok Agarwal pointed out. The Insurance Regulatory and Development Authority of India recently allowed clubbing of add-on covers with main policies.
Some of the important add-on covers on offer are compensation for damage of employee belongings, civil infrastructure, customer goods lying in factory premises and overhead cost of shutting down plants.
A senior official at National Insurance Company, however, said, “Add-ons cannot become the unique selling point because all insurers would be offering the same set of benefits.” Group insurance business would continue to be price driven, he added.
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