Iran Conflict Exposes Travelers to Uninsured Risks, Generali Central CEO Warns

India Insurers Face Geopolitical Risks and Pressure on Margins

Generali Central Insurance managing director and CEO Anup Rau highlighted the long-term need for insurers to assess geopolitical risks, citing the ongoing Iran conflict as an example. The conflict has resulted in subdued travel to affected regions, limiting immediate pressure on insurers.

Travel and Health Insurance

Most standard travel and health insurance policies worldwide exclude losses arising directly from acts of war or military conflict. As a result, travellers need to carefully review policy terms to understand what is and isn't covered. In the immediate term, the direct impact on claims and demand remains limited due to the subdued travel activity in affected regions.

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Commercial Insurance Segments

The Iran conflict is disrupting global trade routes, resulting in heightened risk perception, pricing pressures, and tighter underwriting for commercial insurance segments such as shipping, aviation, and export credit.

Company Outlook

Generali Central Insurance is targeting a gross written premium of Rs 10,000 crore by FY30, representing a doubling of current levels. The company aims to achieve this growth through various segments rather than a single channel.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Industry Challenges

The insurance industry is operating with high loss ratios, with portfolio-level loss ratios exceeding 100 percent. This, combined with operating expenses and commissions, creates an uncomfortable position for insurers.

Regulatory Challenges

One key regulatory challenge facing the sector is the application of expense of management norms at a portfolio level, forcing companies to write more wholesale business at lower profitability. A segmental approach to expense management would be more efficient and sustainable.

Motor Insurance

Motor third-party insurance pricing needs rationalisation, with some segments overpriced and others underpriced. Premiums should be aligned to underlying risk, with reduced premiums where excessive and increased premiums where inadequate. Moving to an MRP-based framework could give insurers more flexibility to offer better pricing directly to customers.

Margins and Premiums

Margins are currently under pressure in both motor and health insurance. While health insurance demand is expected to improve over time, motor insurance will remain dependent on broader macroeconomic factors. Premiums will need to increase in line with medical inflation, subject to regulatory oversight.