The state-controlled general insurance industry consists of General Insurance Corporation, New India Assurance, United India, Oriental Insurance and National Insurance. The five non-life insurance bodies had recorded a net profit of Rs 790 crore in 1996-97.

The mammoth underwriting loss of the companies is mainly on account of the losses suffered on third-party motor claims which have declined by almost 40 per cent to Rs 442 crore from Rs 629 crore in the previous fiscal. The claim ratio in this particular segment is pegged at 135 per cent to 140 per cent.

Since 1990, the general insurance industry has been losing some Rs 2.5 crore per day on account of the low premium charges and high claims. The centre recently allowed GIC to effect a price hike in the third-party category ranging from 200 per cent to 700 percent over a period of three years.

The improved performance of the industry was mainly due to a significant contribution from the investment income of the industry which has shot up by almost 14 per cent to around Rs 2,056 crore during the year under review. The industry has a total investment portfolio of around Rs 18,000 crore.

According to the centre's investment guidelines, the industry can invest up to 55 per cent of its income in the private sector while it is mandatory to invest 45 per cent in government instruments.

Also, the excellent performance by New India Assurance in terms of underwriting profit and net profit has added to the industry's bottomline. New India Assurance has booked an underwriting profit of Rs 57 crore and its net profit has expanded by almost 140 per cent during the year.

Both New India and the second largest subsidiary -- United India -- have declared a dividend of 75 per cent each. However, the net profit of United India has dipped from Rs 190 crore to Rs 149 crore in1997-98.

The industry has set a target of 17 per cent to 18 per cent business growth during 1998-99. The GIC outfits had failed to achieve the projected 14 per cent business growth in 1997-98 due to severe industrial recession.

The general insurance industry recorded the lowest-ever growth in the previous fiscal at 12 per cent. It collected a total premium income of Rs 7,822 crore during 1997-98. GIC and its arms are now planning to mobilise above Rs 9,000 crore in 1998-99.

However, according to company officials, there has been a distinct improvement in the country's industrial climate which has prompted the insurance industry to set an optimistic target for business growth in 1998-99.

The two top general insurance subsidiaries -- New India and United India -- have set a target of Rs 2,867 crore and Rs 2,440 crore, respectively, for 1998-99.

The automobile industry, which contributes almost 33 per cent to the premium of the general insurance industry, has shown a slight improvement recently.

"Therecessionary trend needs to be reversed with a suitable long-term plan in terms of growth for different business areas, business management and proper human resource development for the general insurance industry," an industry expert said.

According to him, the industry's organisational growth and reach has not been matched by growth in business in the `personal line' category like personal accident, medical, property and liability insurances.

GIC chairman D Sengupta has asked the industry to make efforts to avoid fragmentation -- be it in the area of marketing, investment or reinsurance.

``We have to face the competition of the new market place on the basis of our combined strength,''said Sengupta, adding that the GIC group companies would combine creatively to combat inertia and draw up a road map to achieve international standards.

Commenting on the need to change the marketing strategy to face competition, Sengupta said that the companies should no longer be content to wait for the customer,instead it should stimulate demand in order to grow. "Our industry has to devise ways and means to identify new customers. Despite inherent shortcomings in the country's demographic scenario, problems of logistics have to be overcome to reach out to customers," he added.