Page 10 - Insurance Times May 2023
P. 10

cent growth in FY22. It expects 17 per  Air India to get $10-billion  PSU  general  insurers'
          cent growth in FY23 and is targeting
                                            cover from Tata AIG, oth-           market share decreases
          over 20 per cent in FY24.
                                            ers                                 The four public sector general insur-
          "Due to Covid, we were not doing very
                                                                                ance companies have lost 800 basis
          well up to 2021-22, but 2022-23 was a  Tata AIG General Insurance and oth-
                                                                                points (bps) in market share in last
          good year. We saw a growth of about  ers have received the contract to pro-
                                                                                five years to their private counter-
          28.27 per cent up to February and are  vide $10bn cover to Air India and its
                                                                                parts. In  2018-19,  the four had  a
          likely to reach 28-29 per cent by year-  low-cost international subsidiary Air
                                                                                cumulative market share of 40.04
          end. We also expect to grow by 40 per  India Express.
                                                                                per cent, with New India Assurance
          cent  in  FY24,"  said  Anil  Kumar  Under the contract, the airline will pay  having a market share of 14 per
          Aggarwal, MD & CEO, Shriram Gen-  $30m premium this fiscal year, which  cent and United India Insurance
          eral Insurance.                   began on 1 April.                   with a market  share of 9.63 per
                                                                                cent. But, gradually in the past five
                                            Tata  AIG  General  Insurance,  has
                                                                                years, these  state-backed  firms
          Brokers surpass agents as         bagged a significant share of insurance
                                                                                have lost their market share to pri-
                                            premiums,  becoming the  "lead in-
          top in distribution of non                                            vate sector players, due to the de-
                                            surer."
                                                                                clining health of their business.
          life policies
                                            The leader will receive around 36% of
                                                                                The latest data  shows that at the
          Brokers are playing a bigger role in the
                                            the premium and higher risk compared
                                                                                end of FY23,  the market share of
          distribution of non-life insurance in In-  to the rest of the members in the con-
                                                                                these firms cumulatively declined to
          dia, with their share of premiums dou-
                                            sortium.
                                                                                32.37 per cent -- a drop of 803 bps.
          bling to over 35% from 17% over the
                                            According to an industry source, the  Among the four insurers, New India
          last 10 years. Individual and corporate
                                            airline secured a good deal for its en-  Assurance witnessed a marginal fall
          agents have seen their share of premi-
                                            tire fleet despite the ongoing Ukraine  in its market share, of just 64 bps,
          ums shrink in the same period.
                                            conflict.                           and maintained its position as the
          The biggest driver of this shift has been
                                            The airline was provided an insurance  country's leading general insurer.
          motor insurance. Over the years, most                                 The  other  three,  however,  wit-
                                            cover of $8bn last year. It plans to in-
          auto companies have floated their own                                 nessed a considerable erosion in
                                            crease its cover to $10bn this ongoing
          insurance broking firms, which enables                                their  market  standing.  Kolkata-
                                            financial year as it will likely increase
          their dealers to sell insurance policies                              based National Insurance Company
                                            the fleet.
          of multiple companies. Earlier, dealers                               saw the  most erosion  in  market
                                            It is stated in the report that the in-
          had corporate agencies.                                               share of over 300 bps, followed by
                                            surance cover is for Air India's 140 air-  United India Insurance (276 bps),
          Online distributors like Policybazaar
                                            craft and Air India Express' 26 Boeing  and Oriental Insurance (171 bps).
          and Coverfox too have obtained insur-
                                            737 aircraft.
                                                                                Except for New India Assurance, the
          ance broking licences. With the 2020
                                            Other insurers in the consortium, apart  state-owned  general  insurance
          amendment of insurance rules, foreign
                                            from Tata AIG and NIA, include GIC Re,  firms suffered huge losses and have
          investors are allowed to hold 100% in
                                            United India Insurance, Oriental Insur-  seen a depletion in their solvency
          insurance distribution, resulting in sig-
                                            ance  Company, and  ICICI  Lombard  margin, leaving limited room to fo-
          nificant investment.
                                            General Insurance.                  cus on growth.
          The increase in brokers' share has im-
                                                                                According to FY22 disclosures, Ori-
          plications for the non-life industry in
                                            Centre mulls 'free insur-           ental Insurance suffered a net loss
          light of the insurance regulator lifting                              of  Rs 3,104  crore; United  India
                                            ance' for cows, 100% sub-
          the caps on commissions. Insurers also                                Insurance's loss was to the tune of
          have lesser control over the distribu-  sidy on premium likely        Rs 2,135 crore and National Insur-
          tion as brokers are not affiliated with                               ance Company's losses mounted to
                                            Ahead of the 2024 general election,
          any company unlike corporate agents.                                  Rs  1,664  crore. Among the four
                                            the government plans free insurance
          Insurers say that this is a sign of ma-  for cows as currently, farmers pay 20-  state-owned insurers, only New In-
                                                                                dia Assurance reported a net profit
          turing of the industry and will lead to
                                            50 per cent of the premium charged
                                                                                of Rs 164.27 crore.
          more awareness.
                                            by insurance companies even after
            10      May 2023     The Insurance Times
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