Trends: Poor sales in the Indian automobile sector

Poor auto sales dent Oriental Ins premium growth

Poor sales in the Indian automobile sector has hurt premium income of state-owned Oriental Insurance Co Ltd although strong growth in health insurance is expected to marginally stem the impact.

The firm expects premium income to rise marginlly to 40 billion rupees in 2008/09 from 38 billion rupees in 2007/08.

Car sales have fallen in five of the last six months from a year ago as scarce finance and a slowing economy cut demand. Auto insurance accounts for about half the total premium income of the company. Premiums from its health insurance plans may rise to 8.5 billion rupees this fiscal, up from 5.5 billion rupees earned during the previous year.

However, even though interest in health insurance is building up, the sector is dogged by high claims ratio of more than 100 percent. The Insurance Regulatory and Development Authority (IRDA) is planning measures to cut down the high claim ratio.

Oriental Insurance expects its claim ratio to be around 100 percent this year, down from 114 percent. Claim ratio is the ratio of claims paid out to the premium income in a specific period.

February 2, 2009
Source:Reuters UK
URL: http://uk.reuters.com/article/motoringAutoNews/idUKBOM19960720090202