New India Assurance's CMD forecasts 10% rise in FY24, expects accelerated growth from FY25

Speaking exclusively to CNBC-TV18, CMD said though the premium growth has been volatile on a monthly basis, the company is expected to end FY24 with a premium growth at gross as well as net level to be between 8-10% for FY24.

She added that New India Assurance expects to collect premiums to the tune of ₹42,000-42,500 crore in FY24 as compared to ₹38,000 crore last financial year. According to Kapur, the focus at New India Assurance would not just be growth but growth with profitability.

According to her, growth would start accelerating from FY25 onwards where New India assurance would target to match industry growth levels.

Currently, the general insurance industry including standalone health insurance companies as well as specialised insurance companies are growing at 15-18%.

New India Assurance’s underwriting losses increased nearly 62% in second quarter of FY24 on a year-on-year basis and about 66% on a quarter-on-quarter basis. According to Kapur, motor and health are two segments which contribute majority to the growth and now are contributing to majority of the incurred claims but the company is actively monitoring these claims in the concerned segments.

Regular audits of health claims and fraud management is being conducted to reduce claims in the health segment. Another reasons for the elevated underwriting losses in Q2FY24 was the claims which came from the catastrophic incidents from Biparjoy and floods in North-East India.

Kapur also said that the Chennai floods would also get some losses in third quarter of FY24. Though she said that numbers are not clear at the moment. Kapur expects an improvement in incurred claims ratio with the steps which the company has been taking.

On the motor insurance, she said that Motor Own Damage (OD) premiums have been growing strong at nearly 20% and the incurred claims ratio has been coming down. On the Motor Third Party (TP) side, since the prices have not been corrected in current year, the incurred claims ratio has gone up.

The combined ratio in the motor segment is 94% and speaking about targets, Kapur said that New India assurance expects to reduce loss ratios by 5% in all lines of businesses bringing overall loss ratios and underwriting losses down in the same proportion.

Due to the accumulated underwriting losses, New India Assurance’s combined ratio also jumped significantly coming in at 131% at the end of Q2FY24, Kapur said she expects to end the year with combined ratio lower than 115%.

The general insurance industry is operating with an average combined ratio of 115-120%.

Gradually post FY25, New India Assurance expects its combined ratio to reduce by 3-4% each year.

At the end of second quarter of FY24, New India Assurance posted solvency ratio of 170% as compared to the minimum regulatory requirement of 150%. According to Kapur, there is no plan to have any kind of fund infusion from the government into the company, nor does it expect to raise any fund by itself.

The solvency ratio, according to Kapur will start improving from the third quarter of FY24.

New India Assurance hardly saw any growth in booking of investment gains in the first half of FY24. Speaking on the outlook for the second half of FY24, Kapur said that in FY23 the company faced a large wage increase pressure of nearly ₹3,045 crore. The company has started provisioning for wage increase every quarter now.

Taking all these factors under consideration, Kapur said that the FY24 investment income would largely be flat.

Speaking on IRDAI’s consultation paper on de-regulating Motor Third Party (TP) premium, New India Assurance's CMD said that the move may not be in the best interest of policyholders, as it may lead an increase in motor insurance premiums in some parts of the country and hence it would be best to continue to keep motor TP prices regulated for some time now.

Kapur also shared views on the potential merger of the three other PSU general insurance companies like National Insurance, Oriental Insurance and United India Insurance into New India Assurance.

"All 4 PSU general insurance companies are 4 diverse companies with diverse portfolios and so it will be an extremely humongous task to undertake the merger," she told CNBC-TV18.

New India Assurance recently took an average 26-30% price increase in its retail health portfolio but the price increase for the insurer came after a gap of 6 years. Speaking on further price increases, Kapur said that the company would be undertaking a marginal price increase each year to the tune of 2-3% in health segment which would be more sustainable rather than taking a large price increase after taking a long gap.

She also said that fire segment could see some price correction.

Kapur expects reinsurance prices to soften with better considerations in the next cycle of assessment.

Assessment of reinsurance prices happens in December for global markets and in March for the Indian markets.