There is talk of IIB rates from 1st Jan 2025. Will it work?

I tried to look at the loss ratios of the top five insurers in terms of GDPI for Fire portfolio. This is for the period 2023-24.

New India GDPI 4394 Crores Loss Ratio 80%
ICICI Lombard GDPI 3368 Crores Loss Ratio 62%
Bajaj Allianz GDPI 2395 Crores Loss Ratio 47%
United India GDPI 2083 Crores Loss Ratio 78%
Tata AIG GDPI 2075 Crores Loss Ratio 65%

A look at this loss ratio’s does not look very alarming for the market as a whole to discipline itself. Only possibility is while net loss ratios are decent, gross loss ratios are very bad, and the reinsurers are bleeding, and hence proportional treaties are at risk of renewal becoming tough.

Is it that 2024-25 has turned very bad and hence the need for discipline? Again, when I look at public disclosure of ICICI Lombard, their half yearly loss ratio (April 2024 to September 2024) is 56%. Actually, similar period last year, loss ratio was 72%. So, their loss ratio has improved over last year.

When three of the top five insurers are having decent loss ratio’s and their treaties should not be at risk of facing tough renewal, can market discipline be enforced?

Or am I missing something?

Blog by Atmaram Cheruvu