Risk Management in General Insurance Business in India

Over the years, the general insurance companies have been undertaking extensive risk management activities to safeguard the investor as well as investment. In the present-day scenario the two aspects which are of great importance to the general insurance industry are: firstly, the opportunities in the Indian general insurance market and the resulting focus of players on achieving business growth and secondly, the ongoing process of calibrated de-tariffing. Though de-tariffing has provided players with significant opportunities in tapping markets and in coming times may provide even more opportunities, it has placed the onus of correct pricing on the players themselves. This has resulted in players preparing and emphasizing more on identifying risk parameters and pricing products based on risks. The players, under the immediate response to the pressure of a free-market scenario, have dropped the rates even in hitherto non-profitable businesses. An efficient risk assessment and management in general insurance industry is very important due to the entry of private players, corresponding policy changes and the present-day fact of unprofitable books and erosion of capital resulting from unmanageable claim ratios. The present study attempts to identify the various risk management tools applied by the general insurance companies in India and performs a time series analysis of the performance of general insurance business in India in the post-liberalization and post-privatization era. [PUBLICATION ABSTRACT]