Individual agents most preferred for issuing motor insurance policies
“With a share of over 56 per cent, individual agents are the most preferred choice for issuing of motor insurance policies in India followed by direct business which accounts for about 22 per cent share in this regard,” highlighted the study titled ‘Motor Insurance: The way ahead,' conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
In terms of revenue it is seen that individual agents fetched a gross direct premium worth over Rs 9,200 crore while the brokers generated premium worth about Rs 4,700 crore, noted the study prepared by the ASSOCHAM Economic Research Bureau (AERB).
Motor is the largest component of general insurance market as the motor business continued to be the largest non-life insurance segment with a share of 47.05 per cent (45.84 per cent in 2011-12) of the total premium underwritten within the country and it reported a growth rate of 22.24 per cent (33.38 per cent in 2011-12), it added.
“The Motor insurance segment in the country is poised to grow in tandem with the growth in automobile industry as newer and faster models are hitting Indian roads along with better and larger road surface as a result of infrastructure development,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the chamber's study.
“The cumulative effect of increase in road surface and the growth in automobile population should directly impact the growth of motor portfolio of the non-life insurance industry,” said Mr Rawat.
“Rising income levels, increased demand for vehicles, growing auto finance market, increasing health awareness and other related factors can together give a major boost to this sector,” he added.
With the total automobile production including passenger vehicles, commercial vehicles, two and three wheelers growing from about 1.08 crore as of 2007-08 to over 2.06 crore as of 2012-13 and total domestic sales of automobiles growing from over 96 lakh to 1.78 crore during the aforesaid period, motor insurance sector is poised for a strong growth in the coming years, highlighted the ASSOCHAM study.
Customers no longer want just an insurance policy but are increasingly asking for services based insurance coverage, for instance the consumer is looking out for options that provide zero depreciation motor insurance cover, enhanced personal accident and hospitalization cover.
As such, the industry needs to take cognizance of the changing consumer preferences and adopt appropriate strategies as some of the service providers are actually providing certain additional assistance services such as fuel assistance on a highway, towing, spot repairs and others, suggested the ASSOCHAM study.
Another key challenge faced by insurers is that there is not much of data to help them in pricing a risk, pointed out the study. “The pricing as of today is based more on the year of manufacture of the vehicle, engine capacity, price and the zone in which the vehicle is bought and less on the age, occupation and credit score of the driver and usage of the vehicle.”
As we go forward realistic pricing of the insurance product will be required, it added.
Highlighting the importance of claims processing, ASSOCHAM in its study suggested that insurance companies need to work on claims settlement as it is during this process that insurers interact directly with consumers, offering an untapped opportunity to really differentiate them from their competitors.
It must be realized that inefficient processes will lead to dissatisfaction amongst the consumers, noted the ASSOCHAM study. “An efficient claims process is vital to building brand image and a customer friendly claims process ease of submission and progress tracking is highly valued by customers.”
