The slowdown in the automobile sales has taken a hit on motor vehicle insurance premiums, with the public sector New India Assurance Co Ltd registering a six per cent decline in Q1 of FY20.
“The motor vehicle insurance market was not buoyant as the vehicles sales was down. But we managed to grow in other branches of business such as fire, marine, aviation, engineering sectors, posting a 16 per cent growth in the first quarter”, said Atul Sahai, Chairman and Managing Director, New India Assurance Co Ltd. He expressed hope that there would be a turnaround in the automobile sales in the next three months.
Sahai, who was in Kochi for the regional managers conference, said that FY19 has been a challenging year for New India Assurance with multiple catastrophe events affecting both the Indian and foreign operations. The overall impact of these events was roughly about Rs 740 crore.
On the domestic front, he said the company was impacted by adverse performance of the crop line of business where poor climatic conditions led to claim estimates being revised higher coupled with refund of some premium due to area correction factor computation. The company during the year aligned the method of computation of URR for foreign business with that of the Indian business which led to a further hit of about Rs 175 crore. The investment income was impacted by about Rs 116 crore due to write off/provisions made during the year, he said.
With a market share of 14 per cent, the company in FY19 has registered a net profit of Rs 580 crore and the global gross written premium stood at Rs 28,017 crore. The investments continue to show accretion with the assets under management at Rs 69,074 crore. The solvency ratio at 2.13 per cent remains higher than the IRDAI mandated control level solvency ratio of 1.5 per cent.
To a question, Sahai said the budget announcement of 100 per cent FDI in insurance intermediaries is a positive proposal which would help achieve best international practices in the insurance sector.