Get complete information on the Progress of Fire Insurance in India

The fire insurance has not a long history. The real establishment of fire insurance came only after the Great Fire which took place in London in 1666. This fire lasted for four days and destroyed over 13,000 buildings, which awakened the people to the necessity for a form of protection against such calamities.

The insurance received a real fillip only after the growth of commerce. There were a few companies which tried to be more scientific even in some cases; their rates remain standard even now. The decisions of law courts brought the principles of fire insurance to a standard form.

In India, the fire insurance business is not so developed as in foreign countries. With nationalisation of General Insurance Business, it is expected to have a new turn in annals of fire insurance. Before nationalisation the fire insurance had got the following position.

The Gross Premium to Fire Insurers had increased from Rs. 42.83 crores in 1969 to Rs. 51.52 crores in 1971 and further to Rs. 55.29 crores in 1972 and Rs. 117.64 crores in 1978.

The share of Indian insurers to the gross premium has increased from 72.72 per cent in 1969 to 74.0 per cent in, 1970 which declined to 73.6 per cent in 1971 and increased to 78.0 per cent in 1972.

Thus, the Indian insurers were not experiencing established business and were not well off as compared to non-Indian insurers.

The percentage of net premium received by Indian fire insurers to the total net premium had increased from 76.2 per cent in 1969 to 78.8 per cent in 1970 which declined slightly to 78.1 per cent in 1971 and increased to 78.9 per cent in 1972. The non-Indian insurers were losing their business up to 1970 and got a slight improvement in 1971.

The net premium has increased from Rs. 33.59 crores in 1969 to Rs. 42.12 crores in 1971 and further to Rs. 50.98 crores in 1972 and Rs. 98.61 crores in 1977. The Indian insurers were far away in the field of fire insurance as compared to total general insurance.

The share of Indian insurers to the net premium of total general insurance has increased from 80.2 per cent in 1969 to 81.7 per cent in 1971 and further to 82.8 per cent in 1972.

The total net premium has increased from Rs. 91.34 crores in 1969 to Rs. 114.70 crores in 1971 and further to Rs. 136.57 crores in 1972 and Rs. 268.43 crores in 1977.

It reveals that the Indian fire insurers were not doing more effective business than that of non-Indian insurers.

Indian Insurers :

The percentage of net claims payable to net premium has declined to 36.3 per cent in 1970 to 33.5 per cent in 1971 and increased to 35.6 per cent in 1972 giving an increase in balance of income which has gone up from 29.1 per cent of net premium in 1970 to 36.0 per cent in 1971 and increased to 30.4 per cent in 1972.

However, the net commission has increased from 8.8 per cent of net premium in 1970 to 9.0 per cent in 1971 and further to 13.0 per cent in 1972.

It was a satisfactory state of affairs that the expenses of management had gone down from 21.6 per cent of net premium in 1970 to 20.1 per cent in 1971 and further to 19.5 per cent in 1972.

But the percentage of reserve has declined from 5.5 per cent in 1970 to 3.8 per cent in 1971 and increased to 4.7 per cent in 1972.

The Indian insurers were experiencing higher proportion of the net claims as compared to that of non-Indian insurers which declined from 29.7 per cent of net premium in 1970 to 22.6 per cent of net premium in 1971.

The expenses of commission were missing in case of non-Indian insurers whereas the Indian insurers were controlling their expenses of management. The non-Indian insurers were benefited by higher balance of income as compared to that of Indian Insurers.

The share of gross claims payable to gross direct premium has declined from 25.1 per cent in 1970 to 22.3 per cent in 1971 and increased to 23.6 per cent in 1972.

The payment of direct commission remarked at the same level while the expenses of management have declined from 24.1 per cent of gross direct premium in 1970 to 23.8 per cent in 1971 but increased to 24.1 per cent in 1972.

The proportion of miscellaneous income remained at the same level. Thus, the balance of income has increased from 43.5 per cent in 1970 to 48.3 per cent in 1971 and declined to 47.0 per cent in 1972.

The non-Indian insurers have saved more in the shape of gross claims payable. It has declined from 24.8 per cent in 1970 to 19.6 per cent of gross direct premium in 1971.

Direct commission in case of non-Indian insurers has increased. So, the balance of income has not increased so much in the case as had increased in the case of Indian insurers.

The gross claims payable outside India has declined from 42.6 per cent of gross direct premium in 1970 to 26.9 per cent in 1971 and increased to 69.0 per cent in 1972. It reveals that the Indian Insurers were able to save in payment of claims outside India.

However, the expenses of management has increased from 25.4 per cent of gross direct premium in 1970 to 26.4 per cent in 1971 and decreased to 23.4 per cent in 1972. Miscellaneous Income has also increased.

The balance of income has increased tremendously from 0.8 per cent in 1970 to 25.3 per cent of gross premium in 1971 but became negative in 1972.

The net premium income in case of fire insurance outside India has revealed that the business out of India has been increasing. The total net premium income in case of fire insurance has gone upto Rs. 98.61 crores in 1977.