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ANNUAL REPORT 2007-08

India 31.58 (30.80) and Oriental Insurance at 23.67 (19.40). It may be mentioned that the underwriting losses of National Insurance has roughly doubled from Rs.546.17 crore in 2006- 07 to Rs.921.90 crore in 2007-08 (Statement 28). New India reported underwriting profits in the Fire Segment; Oriental and National reported underwriting losses in all three segments – Fire, Marine and Miscellaneous as against profits in Fire Segment in 2006-07; United India too reported underwriting losses in the three segments as in the year 2006-07. Among the private insurers except the new entrants Future Generali and Universal Sompo, all others registered profits in the Fire Segment in 2007-08. In the Marine and Miscellaneous segments all the private insurers reported losses in 2007-08. In the previous year only Royal Sundaram reported a profit of Rs. 1.17 crore in the Marine Segment.

Insurer

2006-07

2007-08

Public Sector

2451.12

3300.59

Private Sector

106.42

598.90

Total

2557.54

3899.49

TABLE 23

UNDERWRITING LOSSES : NON-LIFE INSURERS (Rs. Crore)

The private sector insurers have also registered an increase in underwriting losses from Rs.106.42 crore in 2006-07 to Rs.598.90 crore in 2007-08. These losses constituted about 8.37 per cent of the net premium underwritten in 2007-08 as against 2.28 per cent in 2006-07. In effect, all the companies have reported an increase in underwriting losses during the year 2007-08.

management as in 2006-07. Universal Sompo which commenced operations in 2007-08 was compliant with the limits under the Act and the rules framed there under. Amongst the existing private sector insurers, Royal Sundaram, TATA AIG, Cholamandalam, HDFC and Reliance General were non- compliant in 2007-08. Future Generali which commenced operations in the year 2007-08 is non-compliant in its first year of operations.

Amongst the public sector insurers while New India is compliant with the expenses of management as per Rule 17E, National Insurance, Oriental Insurance and United India were non-compliant during 2007-08.

Insurer

2006-07

2007-08

Public Sector

3606.74

3652.96

Private Sector

1700.15

2482.30

Total

5306.89

6135.27

Note : Public sector does not include ECGC,AIC and GIC

TABLE 24 OPERATING EXPENSES : NON-LIFE INSURERS

(Rs.Crore)

The operating expenses of the non-life insurers increased to Rs.6135.27 crore in 2007-08 (Rs.5306.89 crore in 2006-07) reporting a growth of 15.61 per cent. Public sector insurers incurred operating expenses of Rs.3652.96 crore and the private sector insurers incurred Rs.2482.31 crore. Operating expenses as a per cent of gross premium underwritten was 20.51 per cent for public sector non-life insurers and 22.44 per cent for the private sector insurers. The corresponding ratios for 2006-07 were 20.87 and 19.66 per cent respectively.

Expenses of Non-Life Insurers

Out of the fourteen non-life insurers (excluding specialized companies ECGC, AIC and Health Insurance companies), the expenses of management of five insurers for the year 2007-08 were within the limits prescribed under section 40C read with Rule 17E, as against five in 2006-07. Three private sector insurers (ICICI Lombard, IFFCO-Tokio, and Bajaj Allianz) continued to be compliant with the limits on expenses of

Expenditure towards ‘Employee remuneration & Welfare benefits’ constituted a significant component of the total operating expenses of the public insurers. While this ratio was 78.77 per cent for National Insurance, the highest among the non-life public sector insurers, it was 78.06, 68.67 and 67.81 per cent for United India, Oriental Insurance and New India respectively. As against this, the expenses towards employee costs in the case of private insurers ranged between 20.09 and 53.85 per cent of the operating expenses. The

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