Foreign brokers and reinsurers turn their attention to the
burgeoning Indian insurance market.
A number of foreign brokers, as well as international reinsurers, are eyeing the Indian reinsurance market following the efforts of state-owned New India Assurance Company (NIAC), the largest of the four public sector general insurers, to get reinsurance for its loss-ridden health portfolio.
“The Indian reinsurance market, which was estimated at over Rs33bn ($717m) in 2005, is registering consistent annual growth,” said V Ramakrishna, managing director of insurance broking house India Insure. “The global reinsurance market is a highly evolved one. While the world's top ten reinsurers dominate, there are hundreds of smaller players operating in various niche markets across the world. But the business of reinsurance is highly specialised and will require hands-on experience and expertise.”
In India, General Insurance Corporation (GIC) is the only reinsurance player. There are, however, more than 225 brokers, of which only 31 operate in the reinsurance business as well. While there is compulsory 20% cession of premiums to GIC, several Indian health insurers are now going overseas for additional cover. NIAC's foray into the global market in March this year for health reinsurance was the first example of this. The company is understood to be in talks with Munich Re.
“The main reason behind seeking this reinsurance abroad is to make our health portfolio a more profitable venture,” said a senior NIAC official. “Currently, our local Mediclaim (medical cover) portfolio is making losses. By tying up with an international reinsurer, we would not only be able to diversify our risk, but also gain from its expertise in designing products.”
While NIAC's individual mediclaim segment has a claim ratio of 105%, it rises to 130% in the case of group mediclaim. Since the latter policy for corporates also covers maternity, the claims-to-premium ratio for pregnancy-related cases alone is 220%. Analysts say that reinsurers would like to insure only certain layers of the segment. They would, for instance, reinsure policies for individuals in the age group of 18-25, where the claims are likely to be fewer. NIAC is in the process of redesigning its healthcare portfolio and its search for a reinsurance alliance is in line with this restructuring.