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.
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.
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.
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
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.)
|In India Outside
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|
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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