Global general insurance prices are on the decline, benefiting Indian companies with huge insurable assets.
According to insurance sources, global general insurance prices have come down by 15-20 per cent as claims have been lower and global reinsurance market is flooded with abundant capital.
State-owned ONGC which has the largest insurable assets in India, has succeeded in further bringing down its annual renewal premium by almost 20 per cent to renew its insurance and reinsurance covers by the state-run GIC Re and United India Insurance in 2016-17.
The company, which goes for international bidding in London market, last week shelled out $16 million as premiums for renewing offshore assets valued at $34 billion in 2016-17. It had paid $20 million — a 35 per cent discount — as renewal premiums in 2015-16.
“ONGC has renewed its insurance account for its offshore assets worth $34 billion for a premium of around $16 million, more than 20 per cent lower than what it had paid for last year,” said sources in the London market.
In September 2015, Air India got a 20 per cent discount on insurance premium while renewing its annual policy. Loss-making Air India, whose new policy began from October 1, 2015 paid a premium of $ 22.5 million during the latest renewal as against $ 27 million in
International broker Marsh which was the broker for the ONGC account last year couldn’t register the winning price this year. JLT which had also participated in bidding didn’t succeed in bagging the deal.
One of the striking features of the ONGC’s 2016-17 renewal has been GIC Re, India’s national reinsurer, regaining the prestigious account in an international competitive bidding. In 2015-16 two global reinsurers — Endurance and Aspen — had outbid GIC Re to be the lead reinsurers for the deal. This is the second year that the energy major has managed to get a substantial discount while renewing its account.
In view of the limited capacity for risks in India, big assets of Indian companies are usually reinsured with reinsurers across the globe based in the London market. The terms and conditions, including the premium pricing, are developed by the reinsurance markets, insurance sources said.