Comparative analysis public and private insurance in India
Dr. Manoranjan Nayak
After deregulation of insurance sector, the sector embarked on development programmes with regard to delivery, innovation in products and insurance penetration. Insurance companies have made a shift from monopolistic environment to perfect competitive environment and a positive drive towards the introduction of excellence is risk coverage. The performance of insurance companies in the light of CARAMEL (Capital Adequacy, Asset Adequacy, Reinsurance, Actuarial Issues, Management Soundness, Earning Profitability, and Liquidity) parameters .The performance of companies could be judged by different financial tools but qualitative aspect identified in CARAMEL framework has far reaching implications on the overall performance of insurance companies. IRDA has prescribed solvency measures to put in place of capital adequacy ratio in place to protect the insurance companies and their clients. Investment performance discloses the effectiveness and efficiency of investment decisions. The investment performance is negatively correlated to insolvency rate. In fact insurers are yet to report break even in their operations and it is investment income which has always come to rescue and has provided cushion for the huge underwriting losses suffered by the insurers but the recession of 2008 has affected all the companies and their the investment income has already witnessed decreasing trend. Moreover the price deregulation will put more pressure on the underwriting profitability, the effect of which has already shown its impact and in the free price regime the onus will be on the underwriting performance rather than investment income to be a successful company.