Marsh: India’s Nonlife Premium Rates Hardening

India's nonlife insurance premiums are rising for most business lines even though the market has been very competitive, according to global insurance broker and risk adviser Marsh Inc.

Most commercial lines have seen premiums rise between 10% and 20% in India, according to Marsh's report on 10 major commercial insurance lines in 42 countries in Europe, the Middle East and Africa. The report includes India for the first time.

The ongoing financial downturn has led to inflated loss ratios for insurers in many lines of business. As these types of cover become increasingly unprofitable, Marsh noted insurers are forced to review their pricing.

In India, premium rates rose across nonlife lines such as casualty, property, directors and officers liability, health, professional indemnity and trade credit.

Property premium rates "have bottomed out and local clients are now facing some premium increase, particularly those with poor risk profiles," said Marsh in the report. This sector saw a 10% rise in premiums and the market is anticipated to continue hardening this year.

India's general liability rates "hit a low at the beginning of 2009" and have started to increase this year. "Unless new capacity comes to the local market in 2010, rates are set to continue to harden," said Marsh.

Directors and officers rates increased "markedly" in 2009 following some high-profile corporate fraud payouts in India. Marsh said these events raised local companies' awareness for this insurance protection, driving demand from more clients.

(By Iris Lai, Hong Kong bureau manager: [email protected])