Corporate Insurance Covers Become Cheaper

Mumbai: Insurance companies have begun offering IT, IT-enabled services, business process outsourcing and non-manufacturing companies with policies due for renewal on January 1 discounts of more than 60 per cent.

The move follows the insurance regulator allowing non-life insurance companies full pricing freedom from January 2008. As much as 70% of corporate policies are renewed from January to April. Around 10 per cent of corporate policies, mostly those of multinationals, are renewed on December 31 and January 1. Most insurers typically allow profitable clients a maximum discount mandated by the insurance regulator in January this year, when it allowed non-life insurers partial pricing freedom. Insurers could offer discounts of up to 51.25 per cent of the erstwhile tariff rates on individual rated products (those risks for which the sum insured is more than Rs 10 crore), up to 43.75 per cent in the case of class-rated products (those risks for which the sum insured is less than Rs 10 crore) and 20 per cent on motor own damage for private vehicles.

However, brokers said insurance companies were willing to leverage full pricing freedom to offer clients with a low-risk profile deeper discounts of up to 65 per cent. Media and entertainment companies, chemical companies manufacturing hazardous chemicals and manufacturing companies, which have a bad claims ratio would not, however, be offered such discounts.

Insurance companies were not raising discounts on premiums for motor own damage covers and workmen compensation covers were unchanged. Besides the four public sector insurers, private insurance companies like ICICI Lombard, Bajaj Allianz and Royal Sundaram, which have a large share of engineering companies in their portfolios, are also offering competitive rates in engineering covers. Among engineering covers, insurers are quoting discounts of over 60 per cent for project insurance covers. Under property insurance policies, fire and business interruption covers are seeing large discounts.