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Friday, December 16, 2011

IRDA chief tells companies not to indulge in ‘unhealthy competition'

Insurance companies should not indulge in “unhealthy competition” and fight for the topline at any costs, Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority of India, said here on Friday. This unhealthy competition, according to him, might lead to financial trouble for the companies.

“(Insurance) companies need to improve their practices when it comes to unhealthy competition and be more responsible in accepting policies,” Mr Hari Narayan said on the sidelines of a summit organised by the Insurance Brokers' Association of India (IBAI) said here.According to him, post de-tarriffing, general insurance companies have been offering huge discount on insurance products to tap new customers. For 2010-11, the underwriting losses of domestic general insurance companies were close to Rs 10,000 crore. In portfolios like fire, the discounts have been as high as 70-80 per cent.

“To my knowledge, except for one company all companies are making underwriting losses. What we do is we keep monitoring the health of the companies in terms of overall income because the income of an insurance company is not only the underwriting profit, but it is also their investment income,” he said.

In order to improve transparency in reinsurance contracts, the IRDA is also planning to introduce a comprehensive platform soon. Through reinsurance, general insurance companies insure their risks with a foreign or Indian company.


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