Page 8 - Insurance Times January 2024

125,194 crore with a growth rate of
95% car buyers opt for zero-depreciation cover: Study
15.30 per cent by September 2022,"
Over a decade since their debut, zero-depreciation policies have become the
the Insurance Regulatory and Develop-
top choice for 95% of new car buyers. Often referred to as bumper to bumper
ment Authority of India (IRDAI) said.
coverage, they do not deduct for part depreciation as vehicles age, which
The non-life insurance industry reported has resulted in increased claim frequency.
a premium of Rs 23,814 crore in the In the past, motor insurance claims included a depreciation clause to align
month of October 2023, rising by a with the principle that claimants should not financially benefit from a claim,
more sedate 13.6 per cent compared to but this often left them with out-of-pocket expenses despite the intention to
last month's 29.1 per cent (the growth cover the replacement value of old parts.
had come off a lower base) and 18.5 per
Besides deduction for depreciation, the standard motor policy also had de-
cent in October 2022. ductions for non-metal parts which is not there in zero-depreciation covers.
Health segment is the largest non-life According to a study by Policybazaar, over 95% of new car buyers choose this
segment with a share of 37.57 per coverage. It is not only new car owners, but also policyholders renewing or
cent, followed by motor (28.40 per switching insurers who opt for zero-depreciation coverage. More than 85%
cent) and crop insurance (11.41 per of buyers choose this coverage for up to the third year of ownership.
cent). Marine cargo, marine hull, crop Nitin Kumar, head of motor business at Policybazaar, explains that claim
insurance and liability (total) registered amounts under zero-depreciation policies are higher than average claims due
a negative growth rate as of Septem- to the absence of deductions. Claims under policies without zero deprecia-
ber 2023. tion average between Rs 13,000 and Rs 14,000, whereas those with zero de-

According to IRDAI, the non-life indus- preciation policies see claim amounts rise to Rs 21,000 to Rs 22,000.
try has underwritten a gross premium
of Rs 54,030 crore under the health around 1.7 times this year and has al- mand notice for alleged short payment
segment with a growth rate of 24.43 most doubled in the last 3 months it- of GST of over Rs 5.66 crore. In a regu-
per cent as compared to Rs 43,421 self. The run-up in stock price has latory filing, ICICI Lombard General
crore with a growth rate of 17.92 per added Rs. 27,000 crore to the Insurance Company said it has received
cent as of September 2022. Under the company’s market capitalisation. an order from the Joint Commissioner
health segment, the market share of Neerja Kapur, CMD at New India As- CGST & Central Excise, Bhopal, Madhya
PSU general insurers declined to 40.41 surance alluded the move in the stock Pradesh, raising a GST demand of Rs
per cent as of September 2023 with a price to improving macroeconomic 5,66,02,264 and levying a penalty of
growth rate of 9.92 per cent, down situation as well as the focus from the Rs 56,60,226.
from the market share of 45.75 per cent government and the insurance regula- Taking into account the GST and pen-
in September 2022 with a growth rate tor-IRDAI on increasing the penetra- alty, the total demand amount is over
of 11.30 per cent. tion in the insurance sector. Rs 6.22 crore. Plus, an interest u/s 50
Industry observers said health insurance On its long awaited Offer For Sale (OFS) of the GST act would be levied.
premiums continue to be the primary in the company, Kapur said that a call "The company will be filing an appeal
growth agent of the non-life insurance on the same would be taken by the against the said order," it said.
industry. Government when the time is appro-
The GST demand has been raised on
priate. Though Kapur did confirm that
New India Assurance's there are no active discussions on the the grounds of computation of input
CMD forecasts 10% rise in company’s OFS as of now. tax credit eligible to the company and
alleged undischarged tax liability due
FY24, expects accelerated to differences between returns filed by
ICICI Lombard gets GST
growth from FY25 the company, ICICI Lombard said.
demand notice of over Rs
New India Assurance’s stock has had Shares of ICICI Lombard were trading
nothing short of a dream run on the 5.66 crore at Rs 1413.05, down 0.22 per cent over
stock exchanges. The stock has rallied ICICI Lombard said it received a de- previous close on the BSE.

8 January 2024 The Insurance Times