Risk Assessment on Indian General Insurance Companies Solvency using Expense and Loss Ratio Methods

Abstract

Insurance products are developed to minimize the unanticipated risk which difficult to afford by ordinary individual. Liberalization facilitates to do business by private players in insurance industry. This study is focused to examine the solvency position and operational efficiency by using regression analysis and ratio analysis method. Premium collected, commission expense, investment performance, operating expenses, underwriting profit and assets under management were taken for the regression study. This time series regression model is performed with software package E-Views 7.1, and the regression results were matching with the underlying previous theoretical findings. Early 2000, as pioneering stage, the private players were experimented the policy pricing and asset management, except these two all others are significant. The ratio analysis method were used to understand the long term solvency and short term solvency level of general insurance companies. The ratios are loss ratio, claim ratio, expense ratio and current ratio. Indian insurance companies were segmented as public and private sector companies. The comparative study was done between public sector companies and private sector companies. All the time series analysis are done with software package E-Views 7.1.