If we leave the Motor, Health, and Crop portfolio, Fire is the largest portfolio for any Indian Insurer. It is also the most profitable portfolio for most insurers. For Reinsurers, it is also one of the largest contributors to their topline as well as bottom-line.

Five years of Net loss ratio (Net Incurred claims to Net Earned Premium) of the Fire portfolio is given in the below table:

A look at the above table tells us that from the same market and same portfolio, private sector insurer’s underwriting performance is better than GIC’s by anywhere between 27% and 40%. In other words, private sector insurers are able to structure their fire portfolio reinsurance in such a way that they are able to retain the better part of the fire portfolio and transfer to GIC the worst part of their portfolio. In addition, GIC is paying an RI commission to these insurers for giving them this business. If we leave alone 2017-18, Foreign branches are able to outperform GIC by anywhere between 10% and 51%.

GIC urgently needs to undertake a fire portfolio review and need to train its officials on fire underwriting.

Private sector insurers are outperforming public sector insurers by anywhere between 11% and 44%. When both are operating in the same market, the only difference is in the underwriting quality of the underwriters. Again, an urgent need for Fire Underwriters in public sector insurers to undergo training on how to build a fire portfolio and how to underwrite it profitably?

What is the public service or social service being done by public sector insurers and reinsurers by being the loss leaders in the Fire portfolio? If they are loss leaders in insurance of social and rural sector business, it is at least somewhat understandable.