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The non-life industry has posted robust 28% growth in the first half of this fiscal year, aided by a huge jump in
health premiums. The growth augurs well for general insurance companies whose profitability came under
pressure soon after the insurance regulator freed prices on all lines of business in January 2007. The easing of
price controls triggered a rate war that led to a sharp dip in premiums in segments like property insurance. The
pricing environment has improved now. This is good news for insurers as it will help these companies reduce
their losses.
Companies are offering customised products and also bundling insurance products. The premium collected by
non-life companies in India is only a fifth of the amount garnered by life companies.Higher disposable incomes
will help push up the sales of non-life products such as motor, health, property or fire insurance to
individuals. The creation of more assets will also increase sales of general insurance covers. Robust economic
growth is, therefore, the key to improving penetration in the non-life business. Data collated by insurers shows
that the total premium collected by non-life companies stood at Rs 23,704 crore against Rs 18,496 crore in the
same period in 2010. Health insurance is a major driver, with a 40% rise in the health premium during the period
under review.
Clearly, with rising health costs, there is growing awareness among consumers. However, pricing is a cause for
concern with hospitals overcharging patients covered by health insurance and seldom accepting rates proposed
by insurers. Costs can be lowered if hospitals offer discounts to insurers based on volumes. A pragmatic solution
is for hospitals to adopt low-cost models and a regulatory body to enforce fair competition among hospitals.
This will be in the interest of both consumers and insurers.