Progress of Marine Insurance Business in India

The nature insurance business was nationalized, along with other general insurance by the general insurance (Emergency provisions) Ordinance 1971, which was subsequently replaced by the general Insurance (Emergency Provisions) Act, 1971.

The management of the insurers carrying on General Insurance Business in India was taken over by the Central Government with effect from 13th May 1971. The General Insurance Corporation of India was formed on 22nd Nov. 1972, under the general Insurance.

Business (Nationalization) Act 1972 and by virtue of the same  Act, 55 Indian General  insurance companies became subsidiaries of the  General Insurance Corporation of India  and the undertakings  of the other  erstwhile insurers were  merged into  one or  the other  of four selected  ultimate companies which were to operate in the nationalized set-up, viz., National Insurance Company Ltd., New India Assurance Company  Limited, Oriental Fire & General Insurance Company Ltd.  And United India Fire & General Insurance Company limited.

On 1st January 1974, the 55 Indian insurance companies were also merged into the four ultimate companies by schemes merger. The setting up of a new organizational set-up for the four ultimate companies is still in the process of being completed.

Thus the period from 13th May 1971 to 31st Dec. 1794 has been a period of transition. The progress of marine insurance has been analyzed under progress before nationalization and progress after nationalization.

Business of Indian insurers progress before nationalization

The Gross premium of Indian  insurers has increased  from Rs. 21.06 crores in 1969, i.e.,  76.6 percent  of the gross  premium received  by the marine  insurers, to Rs. 31.61 crores, i.e., 76.4 percent  of the gross premium in 1972. Thus, the gross premium has increased not only in absolute term but it has increased in the relating of total gross premium.

The business of non-Indian insurers has decreased from   23.4 percent of total gross premium in 1969 to 20.6 percent or gross premium in 1972. The non-Indians insurers were unable to increase their share in the total business. The total gross premium incomes of nationalized insurers have increased from Rs.  70.83 crores in 1975 to Rs.  98.32 crores in 1978.

Not only the share of gross premium to Indian Insurers but, the share of net premium to Indian. Insurers have also increased from 75.2 percent of the net premium to 78.2 percent of net premium in   1972. The share of non-Indian insurers has decreased from 24.8.

Percent of total net premium to 21.8 percent of total net premium in 1972. The total  net premium has been  constantly rising from  Rs.  17.96 crores in 1969 to Rs.  27.79 crore in 1972.

As compared to  general  total  general insurance business, the Indian  insurers have booked  less business in the form  in marine insurance business  as the share  of Indian insurers to total  general insurance business  in  1969 was 80.2 percent of total net  received  by all general  insurers which  increased  to 81.7 percent  in 1971 and 82.8 per cent  in 1972 while the corresponding  percentage in  case of marine insurance was 25.2, 76.9 and 78.2 per cent respectively. Thus, the share of marine insurance of Indian insurers was not so high as was the total business in case of general insurances.


Table Marine Insurance Business in India, (1969-1981)

The net premium: In marine has also increased from Rs.  17.96 crore in 1969 to Rs. 24.04 crores in 1971 and Rs. 27.79 crores in 1972 and Rs. 48.71 crores in 1977. The net premium of all insurance has also increased from Rs.  91.35 crores in 1969 to Rs.  114.70 crores in 1971 and further to 136.57 crores  in 1972.


Table Analysis of Ration to Net Premium (%) (1970-1981)

Indian insurers

The percentage of net claim to net premium has declined from 6507 in 1970 to 59.7 percent in 1971 and increased to 61.3 percent in 1972 while non-Indian insurers have experienced correspondingly a higher percentage viz. 62.8, 68.00 and 68.9 per cent. It reveals that the Indian insurers   were rational in payment of claims and were gaining on the ground of payment claims.

But so far payment f commission was concerned Indian insurers were not saving as compared to that of non-Indian insurers. Indian insurers paid net commission as high as 24 percent of net premium in 1970. But the  Indian insurer was  controlling their management expenses more effectively than  that of  non-Indian insurers  who experienced 32.4 percent of net premium at the  minimum while  the Indian-insurers experienced the expenses of 19.5 percent of the net premium at the  maximum.

Moreover, the expenses ratio was declining. This shows that the Indian-insurers were more efficiently managing their business and were gaining much more than the non-Indian insurers. The non-Indian insurers suffered the loss to the 14.8 percent of net premium which has increased to 16.6 percent in 1971 and 30.6 percent in 1972 and 16.9 per cent in 1978. Thus the Indian Insurers were more benefited at every level so far as the ration to net premiums were concerned.


Table Analysis of Ration to Gross Premium (%) (1958-1972)

Indian insurers

The percentage of gross claims payable to gross premium has been constantly declining from 56.7 percent in 1958 to 46.8 percent in 1970 to 41.7 percent in 1971 and further to 50.7 percent in 1972. As compared to that of no-Indian insurers, it has been about two-thirds of their ratios. Thus the Indian insurers were saving much in shape of payment claim.

Similarly, the Indian-insurers were also curtailing their expenses in the form of payment of direct commission which has been as low as 2.4 percent of the gross premium in 1971 whereas it was 4.5 per cent in the case of non-Indian-insurers. The expenses of management were also curtailed more effectively by the Indian insurers.

The expenses of management were also curtailed more effectively by the Indian insurers as were done by the non-Indian insurers. The Indian insurers had expended only 19.2 per cent of their gross premium at the maximum in 1958 whereas it was 23.3 in 1971 of Non-Indian insurers. The Indian insurers were experiencing declining ratios of management expenses to gross premium. The increase in reserve to the Indian insurers.

The Indian insurers were experiencing declining ratios of management expenses to gross premium. The increases in reserved to the Indian insurers were more than the increase in reserve of the non-Indian insurers.

The balance of income to Indian insurers was rising rapidly from 16.4 percent of gross premium in 1958 to 35.1 percent in 1971 whereas the non-Indian insurers were crossing the share of the balance of income to gross premium. Conclusively, it can be stated that the Indian insurers were improving their business and were doing business more effectively than that of non-Indian insurers.

                                                   1970                 1971                              1972
1. Gross Claims Payable

2.Direct Commission

3.Expenses of Managing

4.The increase in Reserve

5. Misc. Income

6.Balance of Income

















The Indian insurers were losing their business outside India as the balance of income has decreased from 17.2 percent of gross premium in 1970 to 18.8 percent of the gross premium. Similarly, the percentage of gross claims payable to gross Direct Premium has increased from 64.3 percent in 1970 to 91.9 percent in 1970 to 11.8 percent in 1971.

However, the management expenses have declined from 16.6 percent in 1970 to 14.2 percent in 1971 and increased to 15.0 percent in 1972.

Table net premium income marine insurance (1975-1981)

(In crores of Rs.)

                                                         1975                                       1977
In India Outside






Total Insurance

1975 1977 1978 1979 1980 1981
India Outside

India Total



15472326 28783370 32375398 38596481 486113599

The net premium income of marine insurance out of Indian has increased from Rs. 14.28 crores in 1975 to Rs. 17.75 crores in 1977. The net premium income in case of total general insurance out of Indian has also increased from Rs.  63.75 crores in 1975 to Rs. 71.46 crores in 1977.

1. Gross direct premium income

The gross direct  premium has been analyzed under the GIC  And the four  subsidiary companies. They  are National  Insurance  Company  Ltd, New Indian  Assurance Company  Ltd., Oriental  Insurance Company Ltd. And  United Indian Insurance Company Ltd.

Table Gross Direct I premium Income  in Marine  in Insurance (In Crore of Rs.)

GIC National New India Oriental India United Total





































































The gross direct premium income has increased from Rs.  70.83 crores  in 1975 to Rs.  132.61 crores in 1980, Rs.  275.19 crores  in 1985, Rs. 464.90 crores  in 1988-89 and Rs.  826.85 crores in 1994-95. The rate of increase has been higher in the later period.

It shows that the general insurance industry has been very particular to extend its benefits to a larger population of the country. United Indian has increased its premium income from Rs.  34.76 crores in 1980 to Rs.  135.03 crores in 1988-89 and Rs.  260.83 crores in 1994-95.

New Indian has also tried to increase its business from Rs.  32.49 crores in 1980 to Rs. 129.01 crores in 1988-89 and Rs. 230.16 crores in 1994-95. They have regular and constant progress. On the other hand, Oriental has increased its business very slowly from Rs. 37.34 crores in 1980 to Rs. 108.08 crores in 1988-89 and Rs. 170.56 crores in 1994-95.

National has the least amount of business. It increased its business from Rs.  28.02 crores in 1980 to Rs.  92.78 crores in  1988-89 and Rs. 165.30 crores in 1994-95.

2. Net premium income

Net premium income has been  observed  in the GIC because  it does  accept  reinsurance  functions although it does not work directly for marine and fire insurance. The  amount  of net premium of  the GIC has increased from  Rs.  38.11 crores in 1982 to Rs. 102.81 crores in 1988-89 and Rs, 187.43 crores in  1994-95. It  has the maximum business than those of subsidiaries.

The total  net premium  income in marine insurance has increased from Rs.  48.00 crores in 1973 to Rs.  156.38 crores  in 1982 by more than three times. This  premium could  not increase at the faster rate at the later part of the period. It increased to rs. 260.36 crores in 1985, Rs. 433.01 crores in 1988-89 and Rs.  734.33 crores in  1994-95. United Indian has  shown satisfactory progress from Rs. 34.88 crores  in 1982 to Rs. 93.27 crores in 1988.89 and Rs. 133.85 crore in 1994-95.

New India has  shown rapid progress from  Rs. 31.05 crores in  1982 to Rs. 96.56 crores in 1988-89 and Rs.  179.84 crores in 1994-95. Oriental has been at the last palace for promoting its  business from  Rs.  30.10 crores in  1982 to Rs.  70.56 crores in 1988-89 and Rs. 113.07 crores in 1994-95. National insurance has  improved its  position from the lowest to the second lowest position.

Table:  Net premium Income In Marine Insurance

(In crores of Rs.)

Year National New India Oriental India United Total
1973 38.11 22.24 31.05 30.10 34.88
1975 44.35 27.53 40.66 34.37 42.70
1980 61.75 33.29 45.10 38.25 82.48
1982 72.59 37.95 53.35 40.78 55.69
1983 71.93 44.79 61.87 45.64 62.79
1984 77.69 51.53 68.34 50.23 74.41
1985 102.81 69.77 96.56 70.66 93.27
1986 95.47 64.37 95.90 65.48 85.33
1987 187.43 120.14 179.84 113.07 133.85
1988-89 221.90 136.36 188.74 124.07 151.41

Note: The GIC transacts mainly reinsurance business.

3. Underwriting experiences in marine insurance

The underwriting profit/loss experience of  marine insurance has decreased from Rs. 6.86 crores in 1982 to Rs.  5.88 crores in  1985 but increased to Rs.  37.81 crores in 1988-89 and Rs. 56.61 crores in 1994-95. It shows that the underwriting profit has increased  rapidly at the later part of the analysis. But as the percentage of net premium, it has increased from 4.3 percent in 1982 to 12.70 cent  in 1988.89 and  declined to 7.0 percent in 1994-95.

National  and New India  have shown losses in 1994-95. National, Oriental and United India have  experienced  losses in some years, whereas united  India has the highest underwriting profit. National and new India  have shown the higher rate of claims. Oriental have the lowest claim ratio. United  Indian and oriental have higher expenses-ration those of new India.

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