This story is from June 22, 2007

Competition pulls down general insurance premia

Arti Sharma / TNN / Jun 22, 2007, 01:37 IST

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Intense competition is driving the general insurance business to lower premia on key accounts.

Competition pulls down general insurance premia

MUMBAI: Intense competition is driving the general insurance business to lower premia on key accounts. Take the NTPC for instance. The company renewed its cover with Oriental Insurance from July 1 onwards. NTPC normally buys its insurance cover on a 1 year plus 1 year basis (making the cover valid for two years).
This time, NTPC insured its assets for Rs 75,000 crore, a whopping Rs 20,000 crore more than what it was insured for the last time around.But the premium it paid was just Rs 62 crore as against the Rs 92 crore it had paid earlier, a decrease of 31%.
According to industry sources, the four public sector general insurance companies — New India Assurance, United India, National Insurance and Oriental Insurance — bid for the account. While National Insurance bid a premium amount of Rs 101 crore, New India's bid stood at Rs 86 crore while United's bid was at Rs 76 crore. Oriental had the lowest bid at Rs 62 crore. This policy covers over 20 of NTPC's operational power plants across the country, say sources.
Similarly, ONGC has also renewed its insurance cover at a discount for its 14 onshore sites spread across Hazira, Assam and other parts of the country. This is despite a Rs 105 crore loss that was incurred on the policy last year due to the floods in Surat which affected the onshore sites of ONGC in the area.

However, this year, the larger portion of the cover — 70% — has gone to New India Assurance while the balance 30% is with National Insurance. ONGC chairman, RS Sharma told TOI that the decrease was a function of market conditions.
ONGC's onshore cover this year is for a sum assured of Rs 25,000 crore, lower than last year's Rs 26,540 crore. Premium is lower at Rs 15 crore compared to last year's Rs 15.43 crore. ONGC has managed to get a 38% reduction in premia for offshore installations.
This week, Air India too bagged an insurance cover at a close to 40% discount in the premium, thanks to the private sector and public sector players battling it out.

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