Published Online:March 2025
Product Name:The IUP Journal of Business Strategy
Product Type:Article
Product Code:IJBS030325
DOI:10.71329/IUPJBS/2025.22.1.42-64
Author Name:Srinivasa H T and K Venkidasamy
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:42-64
The Indian insurance sector has witnessed rapid growth, yet concerns about the financial health and efficiency of general (non-life) insurers persist. This study evaluates the financial performance of four public sector general insurance companies from 2009-10 to 2023-24 using the CARAMEL model, which encompasses six key indicators: Capital Adequacy, Asset Quality, Reinsurance and Risk Retention, Management Efficiency, Earnings and Profitability, and Liquidity. A range of financial ratios under each parameter were analyzed to assess operational and financial effectiveness. The results indicate varied performance across companies, with United India Insurance showing relatively weaker outcomes. However, asset quality and risk retention trends were generally positive for all firms. Strong management efficiency and robust earnings ratios, often exceeding 100%, highlighted stable leadership and effective revenue generation. Liquidity ratios further supported efficient asset use, frequently approaching 200%. Notably, Oriental Insurance demonstrated the strongest overall performance across most metrics. The findings suggest that sustained financial strength in the public non-life insurance sector is closely linked to customer trust and strategic operational management as exemplified by Oriental Insurance.
Insurance is a financial mechanism for risk transfer and management, wherein the insured party pays a premium to transfer the financial burden of potential future losses to an insurer. In return, the insurer agrees to compensate the insured in the event of a covered loss (Rejda & McNamara, 2017).