Insights on India's General Insurance Trends
Budhdeo Kumar Sinha, Founder and Principal Consultant at KISNA Insurance Consultancy & Advisory Services, brings over 35 years of expertise in India’s non-life insurance industry, including senior roles at The Oriental Insurance Company and significant experience in marine, aviation, underwriting, claims, and reinsurance. As an independent consultant and guest faculty with the Insurance Institute of India, Sinha is committed to making insurance more transparent and practical for policyholders. Drawing on his extensive industry background, this article offers readers a deep dive into the complexities and opportunities within India’s general insurance landscape. From unraveling the persistent gap between premium growth and underwriting profitability to exploring the impact of catastrophe, marine, and aviation risks, Mr. Budhdeo's analysis provides actionable insights for both professionals and investors. Readers will gain a nuanced understanding of changing underwriting practices, the role of reinsurance, and key indicators for evaluating long-term sector profitability. This expert-led discussion equips readers to navigate India’s evolving insurance market with greater confidence and clarity.
Q1. Based on your experience in underwriting, claims, and reinsurance, what are the key factors behind the gap between premium growth and underwriting profitability in India's general insurance sector?
Traditionally in India, business growth and underwriting are two separate verticals of any non-life company, i.e., Marketing and Underwriting respectively. Premium growth, or business development, is traditionally preferred, resulting in top-line growth. But prudent underwriting means considering bottom-line figures involving claims outgo, acquisition cost, management expenses, etc., and then deciding on the pricing of a risk; unfortunately, this is not followed in India, resulting in gaps between premium growth and profitability. Because of this recurring scenario, insurers can invest surplus funds in the stock market to improve profitability.
Q2. From your experience handling commercial and property risks, how has catastrophe exposure changed underwriting and pricing practices in recent years?
In property and commercial risk, catastrophe exposure has shifted underwriting practices from risk-based to location-based and portfolio-based underwriting. However, because India strictly implements IIB rates in property underwriting, the portfolio is somewhat profitable, unlike the motor and health portfolios. The portfolio is growing at a rate of 13% annually, with a claim ratio of roughly 40-50%.
Q3. Drawing on your extensive marine …
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