The full detarrification in the domestic general insurance industry, which began since January 1, has put the country?s official reinsurer in a difficult position.
Speaking to reporters on the sidelines of an insurance summit organised by the National Insurance Acaemy (NIA) in Mumbai on Thursday, Yogesh Lohiya, chairman and managing director, GIC Re, said ?I have come to know from media reports that general insurers are reducing the rates in certain segments upto 80% in certain cases. It is uneconomical and let me say that it is a sort of suicidal act. As a reinsurer, I find my task quite difficult to reinsure the insurers at 20% of original pricing.?
According to him all reinsurance treaties renewal would start from April 1.
?Keeping it in view, we have asked our clients to furnish pricing mechanism, details of risk prices, and other relevant details, so as to make our job of reinsuring easy. I am in favour of risk-based pricing, that too fixed on the basis of case-to-case,? he said.
Talking about his company?s business plans, Lohiya said that 72% of revenue in catastrophic cover comes from their business abroad.
Sharing his views with Lohiya, Swaraj Krishnan, chief executive officer, Bajaj Allianz General Insurance, ?Insurance pricing has more to do with risk perception and risk analysis. When I don?t know the base price of my product, how will I be able to discount it?? he said.
Commenting on the detarrification, Krishnan said that data management seems to be the biggest stumbling block today, at a time when market-based wording was likely to come into force from the next financial year.
AV Muralidharan, chairman and managing director, Export Credit Guarantee Corporation, said his company was waiting for approval from the government for entering into global credit insurance.
?We have already got a paid-up capital amounting to Rs 800 crore for the same. ECGC is already handling credit insurance in the country, and now it wants to expand its activities abroad for Indian export houses,? he said.