Gross direct premium earned by general insurance companies from motor vehicle insurance in the own damage category is likely to reach Rs 38,200 crore mark by the end of 2016-17 from a level of about Rs 17,000 crore as of 2012-13, according to a study by industry body Assocham.

“With a share of over 56 per cent, individual agents are the most preferred choice for issuing of motor insurance policies in India followed by direct business which accounts for about 22 per cent share in this regard,” said the study titled ‘Motor Insurance: The way ahead.’

In terms of revenue, it is seen that individual agents fetched a gross direct premium worth over Rs 9,200 crore (in 2012-13), while the brokers generated premium worth about Rs 4,700 crore, noted the study prepared by the Economic Research Bureau of the Associated Chambers of Commerce and Industry of India.

Motor insurance

Motor insurance is the largest component of general insurance market, with a share of 47.05 per cent in 2012-13 (45.84 per cent in 2011-12) of the total premium underwritten within the country and it reported a growth rate of 22.24 per cent (33.38 per cent in 2011-12), it added.

“The motor insurance segment in the country is poised to grow in tandem with the growth in automobile industry as newer and faster models are hitting Indian roads along with better and larger road surface as a result of infrastructure development,” said D.S. Rawat, secretary general of Assocham.

“The cumulative effect of increase in road surface and the growth in automobile population should directly impact the growth of motor portfolio of the non-life insurance industry,” said Rawat.

“Rising income levels, increased demand for vehicles, growing auto finance market, increasing health awareness and other related factors can together give a major boost to this sector,” he added.

Insurance coverage

Customers no longer want just an insurance policy but are increasingly asking for services-based insurance coverage. For instance, the consumer is looking out for options that provide zero depreciation motor insurance cover, enhanced personal accident and hospitalisation cover.

As such, the industry needs to take cognisance of the changing consumer preferences and adopt appropriate strategies as some of the service providers are actually providing certain additional assistance services such as fuel assistance on a highway, towing, spot repairs and others, suggested the study.

Realistic pricing

Another key challenge faced by insurers is that there is not much of data to help them in pricing a risk, pointed out the study. “The pricing as of today is based more on the year of manufacture of the vehicle, engine capacity, price and the zone in which the vehicle is bought and less on the age, occupation and credit score of the driver and usage of the vehicle.”

As we go forward, realistic pricing of the insurance product will be required, it added.

Highlighting the importance of claims processing, the study suggested that insurance companies need to work on claims settlement as it is during this process that insurers interact directly with consumers, offering an untapped opportunity to really differentiate them from their competitors.

Related Topics
comment COMMENT NOW