Page 64 - India Insurance Report 2023- BIMTECH

52 India Insurance Report - Series II

 Considering the impact of climate change, comprehensive Climate Risk Insurance is needed to cover
all the major catastrophe risks in India. Such cover can be made compulsory in areas prone to
Catastrophe risks.

 Use of risk management, risk engineering and loss control tools, allied with merit underwriting both
at the individual risk levels as well as the portfolio levels, be made mandatory. There should be a clear
distinction between uninsurable and insurable (with or without warranties) risks.

3.1.2. Motor Insurance

Motor Insurance is the major segment contributing to India’s larger property and casualty insurance
share. This segment has been steadily growing with a CAGR of 5% to 10% over the years, contributing
to the premium volume of Rs.70,433.48 Crore for 2021-22. However, the segment has a huge potential
to grow in the coming year as property values increase and more people migrate towards urban
destinations. Our analysis indicates that motor insurance will reach over Rs.1,18,000 crore in 2030.

Figure 5: Projection of Motor Insurance Premium - 2030

Though Motor insurance would continue to grow and maintain the position of the second largest
portfolio, particularly with the introduction of Electric Vehicles and AI-driven semi-autonomous vehicles,
this segment would grow more prominent in the next seven years with an optimum premium range of
Rs.1,42,095 (as indicated in the above chart: figure 5) by 2030. However, this sector has the following
operational issues that need to be addressed by industry experts:

 Though Motor insurance produces a large volume of premium, higher discounts, rate cutting in
premium, and OEM, auto-dealers tie-up has contributed to increased ICR; even the ICR of the
Motor OD portfolio has gone up to over 100% in 2021 from 40% in 2010;

 Industry experts opine that the claims leakage of this portfolio could range from 20% to 30%. It has
been further stated that the average claims cost/repair cost is 30% less in private auto garages than