ion of Marine Portfolio in Public Sector Insurance

8/6/2019 ion of Marine Portfolio in Public Sector Insurance

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Marine Portfolio in Public Sector

Companies

By:P.Pavani

Submitted to: Shri. C.P.Rama Sarma


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IntroductionThe entire general insurance business in India was nationalised by General Insurance

Business (Nationalisation) Act, 1972 (GIBNA).

The Government ofIndia (GOI), through Nationalisation took over the shares of 55 Indianinsurance companies and the undertakings of 52 insurers carrying on general insurance

business.

General Insurance Corporation ofIndia (GIC) was formed in pursuance of Section 9(1) ofGIBNA. It was incorporated on 22 November 1972 under the Companies Act, 1956 as aprivate company limited by shares. GIC was formed for the purpose of superintending,controlling and carrying on the business of general insurance.

As soon as GIC was formed, GOI transferred all the shares it held of the generalinsurance companies to GIC. Simultaneously, the nationalised undertakings weretransferred to Indian insurance companies. After a process of mergers among Indianinsurance companies, four companies were left as fully owned subsidiary companies ofGIC (1) National Insurance Company Limited, (2) The New India Assurance CompanyLimited, (3) The Oriental Insurance Company Limited, and (4) United India InsuranceCompany Limited.


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Private CompaniesWhen it comes to Private sector Companies

there are 18 Non-Life Insurers (under-writing

various risks) out which 14 companiesundertake Marine Insurance Business alongwith other risks and 4 Companies under-write only health.


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Companies Dealing with Marine

UnderwritingPresently in Public Sector only subsidiaries along with Export Credit

Guarantee Corporation of India Ltd. is under-writing MarineInsurance risks.

Agriculture Insurance Company Of India Ltd and others does not dealin Marine under-writing.


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New India Assurance Co.

Foreign (Direct) operations also bettered their growth rate from

8.28% to 11.58% despite the slow recovery of the worldeconomy and despite fall in marine premium. Direct foreignbusiness increased from Rs 946.95 crore to Rs 1056.63 crore,a growth of Rs 109.68 crore.

Unexpired Risk Reserves have increased from Rs. 2824.03 croreas at 31.03.2009 to Rs.3115.83 crore as at 31.03.2010. Thusthe additional reserve strain during the year was Rs 291.80crore.

There was a reserve release of Rs. 8.67 crore in marine segmentand reserve strain of Rs.300.47 crore in other segments.


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New India Assurance Company

Fir

rine Miscellaneous

-

-

-

-

erating

/

for

In

rores


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Oriental Insurance Co.

The Gross Premium picked up momentum again by increasing to Rs. 4077.90

crores during 2008-09 as compared to Rs. 3900.20 crores during 2007-08

thereby recording a positive growth of 4.55 %.T

he Company also achievedgrowth of 12.38 % on Net premium. Health business showed impressivegrowth of 33.26 % whereas Engineering, Workmens compensation,

Aviation and Other Miscellaneous segments depicted growth of more than14% , Personnel accident business segment achieved growth rate around 9%

and Marine Cargo recorded 4.04 % growth on gross basis. There wasnegative growth in other lines of business mainly due to reduction in rates.

The Operating profit lead to loss with significant decrease compared to

that of 2007-2008 from Rs.30.27 Crores to Rs.22.81 Crores.


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Oriental Insurance Co.

ire arine iscellaneous

0

50

100

150

200

250

300

350

Operating Loss es

or 2009

InCrores


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National Insurance Co.

The past fiscal was a year of turn around. During the Financial Year 2009-10, GlobalGross Direct Premium of our Company was Rs.4645.97 crore as against Rs.4295.85crore. in the previous year thereby, recording an overall increase of 8.15% of premium

income. The Company earned a Net Profit of Rs.268.59 crore Before Tax in 2009-10.Overall Net Incurred Claim on Net Earned Premium had gone down to 85.05% in thelast fiscal from 99.16% in 2008-09 with marginal increase in Net retention from85.05% in 2008-09 to 85.62% in 2009-10.Fire and Marine portfolios have resulted in asurplus of Rs.116.46 crore and Rs.71.01 crore respectively. Underwriting performanceof Miscellaneous portfolio though continued to show losses, the same was reduced toRs.66.57 crore in 2009-10 as against Rs.394.98 crore in the previous year.

Surplus of Rs.71.01 Crores -2010

Loss of Rs.27.82 Crores -2009

Fire and Marine portfolio has shown to be profitable resulting in a surplus of Rs.116.46 crore and

Rs.71.01 crore respectively. The underwriting performance of Miscellaneous portfolio

continues to show losses of Rs.66.57 crore as against last year figure of Rs.394.98 crore.


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National Insurance Co.

Fire

arine

iscellaneous

Net! "

eratin#

$

oss%

&

ro'

it(

InCrores


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United India Insurance Co.

The Reserve for unexpired risk are made at 50% of net premium except in the

case of Marine Hull business and Terrorism, where it is made at 100% of net

premium.

Apportionment of expenses :

Expenses of Management are apportioned to the Revenue Accounts on the basis

of gross direct premium plus reinsurance accepted, giving weightage of 75%

for Marine business and 100% for Fire and Miscellaneous business.

Expenses relating to policy stamps and reinsurance are directly taken to

respective Revenue Accounts. Expenses relating to Investment, such as safe

custody, collection of interest/dividend, bank charges etc., are apportioned

between Revenue Accounts and Profit and Loss

Account based on policyholders' and shareholders' funds as at the beginning of

the year.


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United India Insurance Co.

Fire)

arine)

iscellaneous

0 1 2 2

0 3 2

2

3 2

1 2 2

1 3 2

4 2 2

4 3 2

5 6 erating 7 & 8 9

or 4 2 1 2

InCrores


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PERFORMANCEIf we Compare the Percentage of Claims settlement

compared to all the four companies we can come to aconclusion about the service and customer care of the

public sector companies.

Here we Compare all Four Companies Outstandingclaims for the Year 2010 and for Oriental 2009 (as theAnnual Report of Oriental is not available).


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Cont...


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Claims Outstanding Claims Paid Claims Incurred Percentage of NCP/NCI

0

50

100

150

200

250

300

Oriental

United

National

New India

InCrores


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Analysis

Claims Outstanding is more in New India Assurance company compared to thatof other companies. The significant issue here is that New India AssuranceCompany though settled many claims this year it is having highest number ofOutstanding claims, the reason is it is having more outstanding claimsforwarded from previous years.

Even if we observe New India is having less difference between claims incurredand claims paid ratio and settled well this year. At an instance if we see the

graph we feel that New India is performing well and stable, but here if weobserve closely United India has less Outstanding Claims at the year end andeven settled Claims well as there is not much difference between ClaimsIncurred and Claims Paid. Though United India also have Outstanding Claimsthe number is less compared to that of other insurance companies. Theimportant point here to mention is that United India is having more Number ofClaims incurred during the year.

I would not prefer to comment more on Oriental as the Annual Report is not latestand even its previous annual reports did not give much information relevant formy analysis.


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SWOT Analysis

Strengths -

Huge Capital resource.

Human Resource is more as it is public sector.

Employees are responsible and can be made liable in case of any

negligence so, due-deligence is followed.

Services are Covered all over the country. Infact to small villages,

towns to metros.

Costs are less as there is no much establishment and processing

burdens.


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SWOT Analysis

Weakness -

Public sector companies are not innovative enough compared to Private

sector companies.

Automation in fields of under-writing, claims processing and product

customization should be introduced.

Customization in Products.

Strategy for business development is very disappointing to this sector. As

they doesnt much followup the customers like in private sector.

Infrastructure is also needs advancement to attract the customers like in

private sector.


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SWOT Analysis

Opportunities -

Though Public sector has few draw backs it has long way ahead.

Even in Competitive environment, Public sector can offer lesser

premium policies as it doesn't have much costs when compared toprivate sector.

Public sector needs to improve in its weaknesses to develop moreand serve more.

Establishment of claim hubs is really good idea to make claims

settlement more faster.

Customer service center can also be established to be more effective.


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THANK YOU!

ion of Marine Portfolio in Public Sector Insurance

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