Get complete information on the Progress of Total General Insurance
The progress of total general insurance has been analysed ulcer gross direct premium, net premium, underwriting experiences, return on total assets, number of employees and number of offices.
1. Gross Direct Premium :
The gross direct premium of all general insurance has increased from Rs. 208 crores in 1973 to Rs. 284 crores in 1975 and again to Rs. 503 crores in 1980, Rs. 1204.31 crores in 1985 and Rs. 2348.92 crores in 1988-89.
Thus, the total insurance has been increasing at a faster rate after nationalisation. It has increased by 466.98 per cent during 1982 to 1988-89. United India increased its business by 504.67 percent from Rs. 121.08 crores in 1980 to Rs. 611.05 crores in 1988- 89.
The gross direct premium of New India has increased from Rs. 128.03 crores in 1980 to Rs. 733.54 crores in 1988-89 by 572.94 per cent. The insurance business of Oriental has from Rs. 111.26 crores in 1980 to Rs. 511.01 crores in 1988-89, by 459.29 per cent. National has increased its business from Rs. 98.59 crores in 1980 to Rs. 452.82 crores 1988-89 be 459.30 per cent.
The maximum growth rate in business has been. New India followed by United India, National and Oriental. The maximum amount of business has been done by New India followed by United India, Oriented and National.
GIC has only aviation insurance which fluctuating as per flights frequency. New India and United India took lead in this field. They have maximum number of employees and offices.
They did commendable task in expansion of insurance business although they did at the cost of lower underwriting profit. Their investment income has been comparatively higher.
The lower business of Oriental and National has not affected underwriting profit. Their- profits have been comparatively higher because they manage, risks and selected only few business, working with profits. The total amount of gross premium was Rs. 4959.43 crores in 1994-95.
2. Net Premium :
The net premium has increased from Rs. 222.0 crores in 1973 to Rs. 281.0 crores in 1975 and again to Rs. 481.0 crores in 1980, Rs. 1190.50 crores in 1985 and again to Rs. 2255.24 crores during 1982 to 1988-89. New India in 1988-89.
The rate of increased has been 311.03 per cent has increased its business from Rs. 187.66 crores in 1982 to Rs. 576.76 crores in 1988-89 by 307.34 per cent. The business of United India has increased from Rs. 158.20 crores in 1982 to Rs. 466.38 crores by 94.80 per cent.
The net premium of Oriental has increased from Rs. 125.86 crores in 1982 to Rs. 384.71 crores in 1988-89 by 305.67 per cent. National increased its business from Rs. 110.43 crores in 1982 to Rs. 366.42 crores in 1988-89 by 331.81 per cent. GIC has increased its business from Rs. 142.93 crores in 1982 to Rs. 460.98 crores in 1988-89 by 322.52 per cent.
The net premium of New India has been maximum whereas of National has been the lowest. Although growth rate of business in National has been the maximum followed by GIC has been higher than the direct premium because it deals with reinsurance business also.
The total amount of net premium was Rs. 4879.43 crores in 1994-95. National Insurance has given the lowest amount of premium.
3. Underwriting Experiences :
The total underwriting experiences has been very unfavorable. The profit of Rs. 66.04 crores in 1982 declined to Rs. 12.42 crores in 1985 and became loss of Rs. 145.72 crores in 1988-89. All the companies have faced loss in 1988-89 because of higher claim ratio which was between 70.7 per cent to 79.4 per cent.
The expense ratio has varied from 25.6 per cent in New India to 29.00 per cent in National. The unexpired risks reserve could not increase as per their previous year’s figure.
The maximum loss suffered was by United India which experienced loss-ratio of 7.7 per cent. GIC has different pattern of aviation insurance. Its loss is not comparable with those of other companies.
The lowest loss-ratio was 5.2 per cent in New India because of comparatively lower expense-ratio. New India and United India has higher claims-ratio and National and Oriental have higher expense ratio.
The underwriting experience has shown loss of Rs. 141.18 crores in 1994-95 by the companies and gone down to 35 crores in 2001.
4. Investment Income :
The investment income of general insurance industry has increased industry has increased from Rs. 130.99 in 1982 to Rs. 244.09 crores in 1982 to Rs. 244.99 crores in 1985, Rs. 487.39 crores In 1988-89 and Rs. 1206.83 crores in 1994-95.
As percentage to total assets, it has increased from 7.57 per cent to 8.27 per cent and again to 10.33 per cent in the respective years; but it declined to 8.58 per cent in 1994-95.
It shows that the investment income has an increasing trend. On the other hand, the underwriting profit has declined from Rs. 66.04 crores to Rs. 39.60 crores, Rs. -145.72 crores and Rs. -110.92 crores in the respective years.
They have also gone down as percentage to total asset from 3.82 per cent to 1.34 per cent, -3.09 per cent and -5.02 per cent in the corresponding years. The loss experience is mainly on account of losses faced under miscellaneous insurance, particularly nontraditional insurance.
The other income has given loss for 1982 to 1988-89 and in 1994-95. Consequently the profitability before taxes has declined from 11.00 per cent in 1982 to 8.35 per cent is 1985, 7.17 per cent in 1988-89 and 3.67 per cent in 1994-95, although the profit amount has increased from Rs. 190.40 crores in 1982 to Rs. 247.43 crores in 1985 and again to Rs. 338.43 crores in 1988-89 Rs. 502.51 crores in 1994-95 and Rs. 2057.75 crores in 2000- 2001.
The amount of profit increased mainly due to increase in investment income. The profitability of investment income has also increased. Had there not been this trend, the insurance industry would have faced loss. The investment income is shock absorber of the underwriting loss.
They should try to increase investment income at faster rate to serve the society better by providing more insurance coverage’s because coverage of higher insurance will essentially have loss-bearing subject-matter.
The profitability has been the lowest in United India as the percentage of profit-before tax to total assets has been 9.26 per cent in 1982, 9.52 per cent in 1985 and 4.91 per cent in 1988-89 and 3.86 per cent in 1994-95. The investment income-ratio has been the second lowest and the underwriting profit has given the highest loss-ratio.
The company should increase its investment income ratio, to set off the losses of underwriting. The highest profitability has been 7.51 per cent in 1988-89 in New India, wherein the investment income-ratio has been the maximum and the underwriting loss ratio has been the lowest consequently the profitability has befits.
Experienced maximum profitability in 1982 wherein the percentage of profit before tax to total assets has been 13.56 per cent.
The highest investment income ratio and underwriting profit have given more profitability. The maximum underwriting profitability has been 6.40 per cent in 1982 in Oriental whereas the maximum investment income ratio has been 14.27 per cent in 1988-89 in GIC.
It shows that the insurance companies should try to increase investment income as well as the underwriting profit.
The profitability in case of insurance business is not very certain in insurance because of high uncertainty of risks. The general insurance cannot predict correctly the claims because the accidents and other eventual factors are mostly unpredictable.
However, the profitability of insurance companies in India is higher than those of USA, Japan, West Germany, France and Switzerland wherein the profitability in 1985 has been respectively 0.6 per cent, 1.3 per cent, 2.1 per cent 1.0 per cent arid 1.2 per cent.
5. Number of Employees :
The total number of employee’s in general insurance industry has been increasing from 41582 in 1982 to 50.559 in 1985 and again to 70940 in 1988-89 and 84561 in 1994-95. The number of employees has been maximum in New India followed by United India, Oriental and National.
In the beginning National has the second lowest number of employees which became the lowest in 1988-89. Thus, National did not attempt to increase number of employees tried to increase their business and the productivity per employee in National and Oriental.
6. Number of Offices :
The number of offices of insurance industry has increased from 1550 in 1982 to 2731 in 1985, Rs. 3739 in 1988-89 and Rs. 4202 in 1994-95. It has also increased its branch offices from 1075, 2003, 2706 and 2997 in the respective years.
The branch offices have been the main factors to procure business from the field. The productivity per branch office has been increasing constantly. The lowest number office has been in National whereas United India has been the maximum. The productivity per office has been the highest in New India followed by United India, Oriental and National.
7. Overall Performances :
The general insurance industry is progressive in India. At the companies particularly New India and United India have increased general insurance business rapidly. They have increased their productivity, claims per employee and investment income.
They have tried to achieve the social subjectively of the nationalisation. The progress of non-traditional business given an impetus to general insurance industry to serve the society fully well.