Government-owned reinsurer — General Insurance Corporation of India (GIC Re) — saw its incurred claims ratio climb above 100 per cent amid rising Covid claims — both on health and life insurance.
Incurred claims ratio — the total value of claims settled to the total value of premiums collected — of the reinsurer was 104.3 per cent for the quarter ended June 30, 2021 against 94.2 per cent previous year and 81.9 per cent for the quarter ended March 31, 2021.
In absolute terms, incurred claims stood at Rs 11,837.40 crore in the June quarter against Rs 12,868.74 crore a year ago and Rs 6,202.19 crore in the January-March quarter.
In a disclosure to the stock exchanges, GIC Re said that the ongoing Covid-19 pandemic is a concern for reinsurers as well since the market will be exposed across the entire business spectrum. The reinsurer made a provision of Rs 5,350.36 crore in its actuarial valuation.
Losses widened during the April-June quarter to Rs 771.73 crore against loss of Rs 557.47 crore in the corresponding quarter previous year and a profit of Rs 1,260.44 crore for the quarter ended March 31, 2021. Gross premium collection during the quarter was at Rs 14,289.92 crore against Rs 15,881.55 crore previous year.In January-March collections were Rs 8,812.83 crore.
“The underwriting performance was impacted on the back of a challenging environment. However, we are taking necessary measures to bring down the incurred claims ratio and improve overall profitability,” Devesh Srivastava, chairman and managing director, GIC Re told analysts at the earnings call.
Srivastava further said that the company continues to focus on bringing down the combined ratio to near 100 (it was 123.4 per cent as of the quarter ended June). The process however could take longer on account of the pandemic. Combined ratio, which includes incurred losses and expenses, is a measure of profitability and financial health of an insurance company.
While the losses on the health side were on the rise, Srivastava said that the health portfolio has also grown amid rising demand for insurance during the Covid pandemic.
