National Insurance cut losses from Rs 3,865 crore to Rs 187 crore and targets FY25 profit
Loss-making Indian state insurer National Insurance pruned and re-priced motor and bulk health books, pivoted to retail, chasing its first profit in a decade.
What was changed
National Insurance Company Ltd, a Kolkata-based public sector general insurer, had lost money for nearly a decade. In FY23 the net loss peaked at Rs 3,865 crore. The medical side of the book was getting structurally worse: medical treatment costs rose 5-20 percent, and the insurer's average claim amount jumped to Rs 41,000 from Rs 27,000 in four to five years — tariffs written for an earlier cost base.
Under executive director T Babu Paul, the company pruned or re-priced the lines that were losing money — motor insurance and group or bulk health products — and shifted focus to retail versions of the same lines, alongside other cost-saving measures. Retail already accounted for about one-third of the Rs 7,000 crore health premium book and nearly two-thirds of the Rs 5,000 crore motor book. In FY24 the net loss narrowed to Rs 187 crore.
In August 2024 Paul said the company expected a net profit of Rs 100-200 crore in FY25 — its first after roughly ten years of losses — provided no catastrophe hit the remaining quarters. A selective single-digit tariff hike was being filed with the regulator as medical costs climbed, and the insurer aimed to cut its dependence on health and motor, 80 percent of the portfolio, to 70 percent within three years by growing fire, home and other miscellaneous lines.
Why it worked
A Rs 3,865 crore FY23 loss made the status quo untenable for a state-owned insurer.
Group and bulk health plus motor had become the loss-makers; retail versions of the same lines carried better economics.
Claims inflation — average claim up from Rs 27,000 to Rs 41,000 in about five years — made old tariffs structurally unprofitable.
Health and motor made up 80 percent of premiums, concentrating the book in two inflation-exposed segments.
What can be applied
When a whole book bleeds, prune or re-price the specific loss-making lines and lean on the retail segments that already earn — portfolio discipline can outlast a decade of losses.
Aftermath
The FY25 profit target was announced as conditional: Paul flagged that no catastrophe could hit the remaining quarters. A single-digit, industry-wide health tariff revision was expected in 2024 to bridge the medical cost gap, with NIC considering a selective hike via a regulatory filing. At the same Assocham event, the General Insurance Council framed the sector goal as 'Insurance for All by 2047', and Assocham and PwC released a report on the future of Indian insurance. Whether the profit landed is not in the source.