Bajaj Allianz may have thus far insured 60 weddings (against monetary losses arising from cancellation or accidents), and ICICI Lombard may insure the weather (for instance, to protect farmers from crop damage), but the non-life insurance industry in India is constrained by regulations. Thus, for instance, an insurance firm cannot charge a higher premium to insure a sports car being driven by a 25-year-old from New Delhi than it would to insure a mid-sized sedan driven by a middle-aged woman in Chennai. Most non-life insurance products in India are tariffed, which means companies more or less charge the same, irrespective of who the customer is. Tariffing is a logical component in an industry's early years. Insurance companies make money by risk management; to do so, they need adequate data; in an industry's early years, they may not have enough data to assess the risks, and, ergo, to arrive at the right tariff (or premium) for a product. India's non-life insurance industry, opened to private competition at the same time the life insurance industry was, however, believes that the time is ripe for de-tariffing. "In a detariffed environment, the premium, say in motor insurance, will be determined on the basis of a customer's track record, the quality of driving, the repair cost, etc.," says Sandeep Bakhshi, Managing Director, ICICI Lombard. Today, that isn't possible; almost 70 per cent of all non-life insurance products fall under the tariff regime; this includes the top revenue generators, motor and fire insurance.

"I believe the insurance firms should get at least 10-15 per cent of the Rs 1,50,000-crore health industry" Sandeep Bakhshi Managing Director ICICI Lombard

The big growth driver for non-life insurance companies, however, could be health insurance, now a mere Rs 1,400-crore business. Executives in general insurance companies, however, believe that much of this has to do with the country's poor healthcare infrastructure. This will change, they promise. "The size of the total health industry is almost Rs 1,50,000 crore," says Bakhshi. "I believe the insurance industry should get at least 10-15 per cent of this, Rs 10,000-15,000 crore."

"The cut-throat competition amongst the private players is also taking its toll on the premium rates" Kamlesh Goyal Managing Director Bajaj Allianz

If the mood in the non-life industry is a trifle subdued, blame it on the fact that the past 12 months have seen their share of natural disasters in India. Floods, earthquakes and man-made disturbances such as terrorist attacks do not bode well for the industry, and India has received more than its fair share in all three categories in 2004-05. That, the limited room to manoeuvre in terms of product innovations, and intense competition have meant that most companies are yet to make under-writing profits. "The initial management expenses are much higher," says Kamlesh Goyal, Managing Director, Bajaj Allianz General Insurance. "The competition amongst the private players is also taking its toll." However, he adds that Bajaj Allianz did make an underwriting profit of Rs 28 crore in the previous financial year.

Another category that the non-life insurance firms are betting on is liability products. These are very popular in global markets. "As Indian companies go global, there will be demand for liability products such as Director & Officers Liability," says Shrirang Samant, Managing Director, HDFC Chubb. The share of liability products (of the total general insurance pie) in India is a mere 2-3 per cent; in the United States it is 45-50 per cent.

Despite being handicapped by the tariff regime, India's non-life private sector insurers can take heart from the fact that they have made more inroads into the retail market than the four subsidiaries of the General Insurance Corporation (GIC) of India. That's something.