annual report 2009-10 - IRDA

ANNUAL REPORT 2009-10I.3.46 Commission expenses and operating expensesconstitute a major part of the total expenses. Theoperating expenses of non-life insurance companiesstood at `8,392 crore in 2009-10 as against `7,364crore in 2008-09, registering a growth of 13.95 percent. This growth in the operating expenses was quitehigh for public sector insurers (21.05 per cent) ascompared to private sector insurers (3.72 per cent).TABLE 26OPERATING EXPENSES : NON-LIFE INSURERS(` crore)Insurer 2008-09 2009-10Public Sector 4347.21 5262.59Private Sector 3017.22 3129.61Total 7364.43 8392.20Note : Public sector does not include ECGC, AIC and GICI.3.47 As per section 40C of the Insurance Act, 1938no insurer can spend as expenses of management inany year an amount in excess of the limits prescribedunder Rule 17E of the Insurance Rules, 1939. Rule17E takes into consideration the size and age of theinsurer while stipulating the limits of these expenses.The Authority based on the recommendation of theGeneral Insurance Council constituted under Section64F may enhance the limits in any year.I.3.48 The Authority has granted exemption on thelimits under Rule 17E to 15 private insurers in the firstfive years of commencement of their businessoperations.I.3.49 Out of the 22 non-life insurance companies(including the four public sector undertakings and thetwo specialised institutions) in the year 2009-10, eightcompanies are in the exemption period. Of thebalance, four are compliant with the limits under Rule17E.Incurred Claims RatioI.3.50 The net incurred claims of the non-life insurersstood at `22,230 crore in 2009-10 as against `19,717crore in 2008-09. The incurred claims exhibited anincrease of 12.74 per cent during 2009-10. While thepublic sector insurers reported lower growth at 9.75per cent in the incurred claims, the same was high forprivate insurers at 19.47 per cent. However, overallthe growth in incurred claims during 2009-10 at 12.74per cent was lower than the 20.44 per cent recordedduring the previous year.TABLE 27NET INCURRED CLAIMS : NON-LIFE INSURERS(` crore)Insurer 2008-09 2009-10Public Sector 13637.79 14967.23(12.48) (9.75)Private Sector 6079.16 7262.49(43.16) (19.47)Total 19716.95 22229.72(20.44) (12.74)Note: Figures in brackets indicate the growth rate (in per cent)of the respective sectorI.3.51 The incurred claims ratio (net incurred claimsto net premium) of the non-life insurance industryremained at around 86 per cent during 2009-10 as inthe previous year. Between private and public sectorinsurers, it is the public sector insurers, which have acomparatively higher incurred claims ratio at88.27 per cent (91.30 in 2008-09). The same forprivate sector insurers was 80.30 per cent (76.89 in2008-09).I.3.52 Among the various segments, health insurancehad a high claims ratio at 111.13 per cent. Incomparison to the previous year, the incurred claimsratio in the health segment exhibited an increase from105.95 per cent. The other segment which reported ahigh claims ratio was motor insurance at 84.51 percent, although this was lower than the claims ratio in2008-09 at 88.84 per cent. There was a substantialreduction in the incurred claims ratio in the marinesegment from 102.90 per cent in 2008-09 to 78.08per cent in 2009-10.27