Page 21 - Insurance Times June 2021

manageable (estimated 10-15% y/y falls) as rise in Covid- Motor Motor Health Health
claims is offset by lower normal claims. Insurance Growth Insurance Growth
(Rs. Cr) (%) (Rs. Cr) (%)
For the first time in India's insurance sector, the health Public Sector 8121.34 -18.55 10829.44 11.57
business has beaten the motor vertical to become the
insurers
biggest non-life industry segment, boosted by a rise in
standard Corona virus plans. On the other hand, a slump in Private 14132.36 -14.02 12074 14.26
Sector
vehicle sales has affected motor insurance. IRDAI data
showed that while motor insurance premiums saw a 15.7 insurers
percent decline, health insurance premiums saw a 13 Standalone NA NA 6096.46 28.85
percent YoY growth in the April 1-August 31 period. For the health
general insurance industry, premium collections remained insurers
muted for the period with just a 3.6 percent YoY rise to Rs Industry 22253.7 -15.73 22903.44 12.97
73,968.26 crore. The health insurance business contributed Total
Rs 22,903.44 crore.
Standardized insurance products to
Till now, the motor insurance segment, driven primarily by
the mandatory motor third-party insurance, has always improve penetration:
been the largest business segment in the general insurance The Regulator has announced a number of standardized
sector. However this year, Covid-19 played spoilsport. On the insurance products for term life, health, residential property
other hand, a slump in vehicle sales has affected motor and small businesses, to increase insurance penetration in
insurance. When it comes to third-party cover, it includes the country. Standardizing insurance products will help first-
insurance for new vehicles as well as renewals. The reality time buyers purchase a plan without having to pore over
is that customers are not renewing their vehicle insurance documents or make comparisons. Only 79% of four-wheelers
since remote working is the new normal. This has severely and 36% of two-wheelers have mandatory third-party
affected motor premiums. insurance. Of the total dwelling units in the country, only
0.9% are covered by insurance and 62% of healthcare
The concept of long term motor insurance plans was unveiled expenditure is paid out of pocket. Despite the temporary
in 2018 when IRDAI mandated new vehicles, bought on or negative impact on the insurance industry of the Covid-19
after 1st September 2018, to have a mandatory long term pandemic, the industry will move towards its long-term
third party cover. With that change came long term average growth rate of 12% for life, 18% for general, and
comprehensive plans which offered long term coverage for 25-40% for health insurance.
third party liability and own damage cover. These plans
have, however, been withdrawn from 1st August 2020. Health insurance can emerge as key growth driver in post
Though long term third party coverage would still be Covid-era. Low penetration of health insurance is evident
mandatory for new vehicles, long term own damage cover from the fact that over 60% of medical expenses are
has been withdrawn. Vehicle owners can, therefore, buy personally incurred by patient. Only 10% of the population
bundled plans with a long term third party cover and one has taken commercial insurance (i.e. outside Govt. plans).
year own damage cover. This segment is sized at over Rs 500 bn in India and over
the next five years we see this more than doubling. ICICI
Lombard could be a key beneficiary of this uptick, and we
expect this segment to be key growth driver.

Health insurance premium shoot up 40-
70%:

Health insurers have hiked their premiums for medical
insurance plans by 40-70% following regulatory directives for
them to broaden coverage over more illnesses. In addition,
exclusions in health insurance policies will be completely
standardized. Previously, the exclusions were not fixed

The Insurance Times, June 2021 21