With the new amended Motor Vehicles Act coming into place, people have become cautious about their vehicles to avoid hefty penalties. Amitabh Jain, Head, Motor & Health – Underwriting & Claims, ICICI Lombard General Insurance told Aparajita Gupta that the company is experiencing an average increase of three to four times in insurance renewal enquiries for old vehicles.
The media coverage of the new Motor Vehicles Act enacted on August 9, 2019 is focused around the increase of penalty amount for traffic violation. While it is one of the important aspects of the new legislation, the amended act encompasses a lot other aspects, which would impact the vehicle owner, driver and other road users in several ways. This includes (and not restricted to) the definition of third party victim and property in an accident, increase of compensation to victims, intimation of third party claims directly to insurer, measures to mitigate fake DLs, coverages and benefits for victim during accident and protection of good Samaritan to spell out a few. We are experiencing an average increase of three to four times in insurance renewal enquiries for old vehicles.
The reluctance stems basically from lack of awareness of the benefits of insurance and having a short sighted view of the risks involved in driving a vehicle.
Claim frequency is often a function of underwriting practices (scope of which may be limited in current market scenarios). With more available information in the market, underwriting of risk is only going to get better, however initial spurt in frequency cannot be ruled out. Further, the claim amount and incidence of claim would go up keeping in mind the enhanced compensation and other provisions of the new MV Act. Also, the cost of labour and spares parts has seen an upward swing which would increase the claim size.
In FY 19, ICICI Lombard had motor gross written premium of around Rs 6,400 crore.
By the end of this fiscal by what percentage you expect motor insurance business to grow?
We have achieved 14.1 per cent growth in gross written premium (GWP) in Q1 of FY 20 as compared to Q1 of FY 19. We are targeting an annual growth of around 17 per cent to 18 per cent over last year in terms of GWP.