Have signed a Statement of intent (SOI) with the Finance Ministry for achieving time-framed underwriting profit
The public sector general insurers in India have signed a Statement of Intent (SOI) with the Finance Ministry for achieving time-framed underwriting profit – reported The Hindu Business Line.
The top officials stated that the SOI frames targets for achieving profit on its underwriting business for the current financial year. The SOI linked the employee incentive payouts for achieving the targets.
The officials also stated that the insurers were expected to reach 50% of the targets in the SOI as a pre-requisite for making employee incentive payouts.
The officials further added that the SOI was focused to ensure that the PSU insurers start generating positive underwriting margins. All the four insurers are faced with severe underwriting losses that have mounted to INR42.92 billion, post deregulation of premiums. The highest underwriting losses were for New India Assurance Company Limited at INR14.4 billion, largely in view of its size.
So far, insurers have offset their underwriting losses, through investment profits. However, officials said that the ability of the insurers to neutralise underwriting losses through investment profits have considerably deteriorated, quoted the newspaper.