ANNUAL REPORT 2007-08
for this purpose and the Authority instructed that when the prospects / policyholder propose to take a ULIP policy he / she should sign on both the formats in the proposal form itself. This will benefit the policyholders in knowing about the terms / benefits of the policy and also reduce mis-selling by the agents in quoting abnormal investment returns.
All the 18 life insurers who underwrote premiums during 2007- 08 have complied with the stipulated requirement of a solvency ratio of 1.5. The Solvency ratio of LIC at 1.52 is the lowest among all the life insurers. Two newly established insurance companies, namely Future Generali India Life Insurance Company Ltd and IDBI fortis Life Insurance Company Ltd. had solvency ratios of 2.94 and 3.45 respectively. While 11 life insurers have improved their solvency ratios during 2007- 08 over the previous year, in the case of 5 life insurers this ratio declined during the year 2007-08 over the previous year. Among them, the solvency ratio of Aviva Life Insurance Company ltd., has come down sharply from 6.31 in the year 2007-08 to 2.37 in the year 2006-07. (Statement 49)
All the four public sector non-life insurers have met the stipulated solvency ratio of 1.5. Amongst the specialized insurance companies, ECGC which is underwriting credit business had a solvency ratio of 18.91 as against 11.41 reported in the previous year as on March 31, 2007. Agriculture Insurance Company has reported a solvency ratio of 3.27 as
on March 31, 2008 as against 2.05 as on March 31, 2007. All the non-life private insurers have met their stipulated solvency requirement except M/s Apollo DKV Insurance Company Ltd which is a standalone health insurance company. The solvency ratio of this as on March 31, 2008 was 1.39. However the company subsequently infused capital to the tune of Rs. 61 crore to improve its solvency position. As a result of this the solvency ratio of the company as on August 31, 2008 stood above the minimum of 1.5. Star Health, which is another standalone health insurance company had a solvency ratio of 1.97 as on March 31, 2008.
The national re-insurer, General Insurance Corporation, reported solvency ratio of 3.36 as on March 31, 2008 as against 4.10 as on March 31, 2007.
iii. Monitoring of re-insurance
Section 14(1) and 14(2) Sub Section (f) of the IRDAAct, 1999 as well as Sections 34F, 101A, 101B and 101C of the Insurance Act, 1938 provides a mandate to the Authority in respect of re-insurance. TheAuthority has framed regulations laying down ground rules in placing re-insurance with the re- insurers. Under the provisions of the Insurance Act, 1938, the General Insurance Corporation of India has been designated as the “Indian re-insurer” which entitles it to receive obligatory cessions of 10 per cent from all the direct general insurers in 2008-09. The limits have been laid down in consultation with the Re-insurance Advisory Committee.
TABLE 30 NET RETAINED PREMIUM ON INDIAN BUSINESS AS PERCENTAGE OF GROSS DIRECT PREMIUM (EXCL. GIC) (Per cent)
2006 – 2007 Private Sector
2007 – 2008 Private Sector