A silver lining for general insurers | Economic Times

Mumbai: India’s general insurance sector is set to gradually recover from high loss ratios, which hit the solvency margins of top players in the first half of 2021, on the back of reducing Covid-19 cases and increased vaccinations, ICICI Securities has said.“The heightened loss ratios and in turn lower solvency for India’s health insurers in Q4FY21/Q1FY22 are expected to normalise gradually with a reduction in Covid cases and increased vaccinations (assuming no recurring Covid waves),” the brokerage said in a report on Wednesday.Only select firms such as Star Health and Niva Bupa (formerly Max Bupa) posted loss ratio — which measures total incurred losses in relation to the total premium collected — below 100 in the June quarter, which coincided with a devastating second wave of the pandemic in India. Others such as Bajaj Allianz GI, ICICI Lombard, HDFC Ergo and Care Health all posted a loss ratio in excess of 100.A loss ratio above 100% indicates that for the given time period the insurer is unprofitable because it is paying out more in claims than it is receiving in premium.“Select players outperformed in Q1FY22 in terms of loss ratios, but depending upon reserving, the complete picture is best seen on an annual basis,” the brokerage said.The industry — which includes 25 general insurers and six standalone health insurers — has so far received 1.3 million claims in FY22 on account of the coronavirus, of which 1.04 million have been settled as of July 18, the report said.In terms of value, the insurance companies have received total claims worth Rs 14,660 crore in FY22 to date against Rs 14,680 crore in the entire of FY21. Out of these claims, Rs 9,900 crore have been settled so far this fiscal as against Rs 7,900 crore in the whole FY21, it said.“However, news reports indicate higher rejection rates due to hiding of pre-existing conditions, raising a claim before the waiting period after purchasing a policy, not supported by valid documents, or producing fake documents including Covid certificates,” the report said.Solvency margins, too took a slight hit. Both HDFC Ergo and Star Health have seen the solvency ratio decline to 170% in Q1FY22 against 200% in Q1FY21. IPO-bound Care Health’s ratio dropped to 180% in Q1FY22 from 260% in the corresponding period of last year.