Though public sector general insurers are better capitalised to fund their future growth, industry officials feel adequate premium pricing and right reinsurance cover will enable the industry to chug ahead.
Mumbai: Though public sector general insurers are better capitalised to fund their future growth, industry officials feel adequate premium pricing and right reinsurance cover will enable the industry to chug ahead.
"If premium adequacy and right amount of reinsurance support are there, the current solvency ratio of general insurers are sufficient to take care of future growth," General Insurance Council secretary-general R Chandrasekaran told PTI over the weekend.
He further said the industry would require more capital if it grows above the recent industry average of around 18-20 percent.
Last week, rating agency Icra has come out with a report which said the industry will require around Rs 17,500 crore of capital over the next five years if the industry grows at a CAGR of 15-20 percent.
As per the report, private sector players are likely to require around Rs 8,000 crore during this period.
The Icra report said that public sector companies are better placed to fund future capital needs if required as they are sitting on unrealised gains in investment portfolio of around Rs 33,100 crore by the end of the September quarter.
"The long-history of operations of public sector insurers has created assets that are yet to be realised," New India Assurance general manager and whole-time director K Sanath Kumar said.
He also added that since the nationalisation, public sector companies had funded their growth through internal accruals.
Referring to this, an official from a private sector insurer said, "Though private sector insurers don't have legacy investments in their kitty, the parentage of most of the companies are very strong, which will ensure capital infusion when required."