General insurers are faced with double whammy in terms of reduced premiums and fall in commission from reinsurance portfolio as the fallout of detariffing, which has removed all pricing controls on non-life insurance.
As it is — insurance premium is falling, but now reinsurers are paying lower commission to insurance companies, which would ultimately affect their bottomolines, said an insurer.
The price-war in post complete detarriffing from January this year has led to huge discounts on fire, engineering and other general insurance policies resulting in the premium reduction as high as 70-80 percent from earlier instalments.
With this, reinsurers have also reduced their commission to insurers for the cover they sought from the reinsurance companies. As per normal practice, a major chunk of the premium collected goes for reinsurance on which the insurers earn commission. Since in many instances, large risks are being placed at low premiums, reinsurers are reducing commissions to insurance companies upon the renewal of their treaties, the insurer added.
Source:
New Delhi, Deccan Herald
Wednesday, May 21, 2008
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