Private car segment remains a large share of the gross written premium for general insurance firms. However due to multiple factors such as the growing cost of repairs, cost of acquisition and the general growth expense has made the segment difficult to operate with margins.
Mr Bhargav Dasgupta, the Managing Director and CEO of ICICI Lombard, in a recent interview with CNBC TV18 stated "..the only segment we are still cautious is the motor segment. particularly the private car segment where the combined ratio of the industry is 118 (based on 9 month data). 118 combined does not make it viable to write this business..." Further he stated that the industry would thereby be making sensible calls in relation to the pricing of the business, indicating that the insurance premium would be increasing as insurers relook at their underwriting practices.
Private car business which is largely an OEM (original equipment manufacturer) driven business, remains under duress as part cost and labour cost for repair of the vehicle is dictated by the manufacturer. Further said cost have increased on a year on year basis by manufacturers sighting rise in inflation and raw material cost.
An alternative for insurers for private car remains the non OEM business i.e business procured through their agency channel where claims may get serviced through a non OEM repairer leading to low cost of repair. New age companies such as Acko and GoDigit are also banking on their agency channel to grow through agency channel towards profitable business.
Content Source: https://www.google.com/amp/s/www.cnbctv18.com/business/icici-lombard-remains-cautious-on-private-car-insurance-segment-says-md-16494901.htm/amp
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