Motor insurance business, which is a single largest segment of general insurance industry, is experiencing a dip in its new premium collection. This is largely attributable to economic slowdown and falling auto sales. In addition to this, huge dip in demand for commercial vehicle due to banned on mining operation has also contributed to the de growth in the premium amount.
Insurance industry is also facing the challenge of sustaining the investment income due to recent RBI tightening. Industry experts believe that investment income will come down in current quarter due to liquidity tightening by RBI. Till last quarter, insurance company had posted huge non operational profit on account of sale of its investment.
According to the statistics, the growth for the month of June 2013 has come down to 12% as against the average of 18% in the past.
In order to compensate for the above, insurance industry is focusing on renewal premium. According to Mr. K. Sanath Kumar. General Manager and Whole time Director of The New India Assurance Company Limited, since the overall automobile industry is experiencing slow down on account of economic crisis, company is focusing more on personal line of business and entering in rural areas.
Mr. Rakesh Jain, Chief Executive of Reliance General Insurance said that the company intends to shift its focus from the motor insurance business, bring it down to below 60% and increase its health insurance business to around 20%. The company also has plans to grow fire, engineering and marine set.