State-owned non-life insurer National Insurance Company Ltd will have to make a provision of around Rs 1,500 crore to write off the total accumulated loss of the Indian Motor Commercial third party pool, which was dismantled last year.
"Total provisioning has to be close to Rs 1,500 crore. Last year we had provided for Rs 300 crore and in the current fiscal and 2013-14 we will have to provide around Rs 600 crore each on the account of the TP (third party) motor losses," said A V Girijakumar, general manager at National Insurance Co at a CII organised insurance meet.
"These are basically carry forward losses which we incurred till 2011-12," Girijakumar said.
The pool was dismantled last year and the accumulated losses were shared among the general insurance companies.
The regulator IRDA had asked the insurers to provide for their losses either at one go or over a period of three years.
Motor policies accounted for more than 45 per cent of the total general insurance premium of Rs 5,500 crore collected during 2011-12.
Typically third party liabilities accounted for 35 per cent of the total motor premium.
Despite the provisions, the general insurer was confident of maintaining the bottomline levels in the current financial year at Rs 325 crore.
"We have a premium collection target of Rs 9,393 crore in the current financial year growing about 20 per cent over last year," Girijakumar said.
Meanwhile, in line with non-life PSUs, NIC is looking to increase the premiums for individual health insurance policies by 20-25 per cent going forward.
"We have filed the products with the new pricing. In some of the cases the premiums have been increased by 30 per cent.
We are awaiting regulator's approval," Girijakumar said.