Small cars dent profits of motor insurance companies.

Friday 26, August, 2011 The high proportion of imported components in small cars is denting profits of motor insurance companies, with their claims ratio rising to 70% from 40% in the past two years. General insurers, who face huge losses in their motor insurance portfolio because of accidents and third-party cover, say replacing damaged imported parts in vehicles is a costly affair. Claims ratio is the amount an insurer pays as claim on every 100 of premium it earns. Car sales in India grew at record levels near 30% in the last two fiscals, which also saw automobile companies aggressively push into the below 5-lakh category with new car launches.

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