General Insurers face tough choice on pushing growth and sustaining margins

The country’s general insurance companies are currently grappling with a crucial dilemma between pursuing growth and maintaining profitability at a time when they are allowed to spend more on operating expenses even as their margins have been narrowing.

In the fiscal year 2023, the combined ratio – an indicator of profitability, which is calculated by measuring the sum of incurred losses and operating expenses as a percentage of earned premium – rose for almost all general insurers.

If the combined ratio is below 100%, it indicates that the insurer is making an underwriting profit; if it’s above 100%, then the firm could be spending more in claims than it is earning through premiums. The insurer could still be profitable because the combined ratio does not take into account investment income.