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The direct premium grossed earned by general insurers via the motor vehicle insurance is expected to reach Rs 38,200 crore target by 2017. It will be a 60% increase in the growth rate from a level of about Rs 17,000 crore in 2012-13, according to a published report by Assocham.
The study titled ‘Motor Insurance: The way ahead’ revealed that individual agents are highly preferred for issuing insurance policies with a 56% share of Indian market, followed by direct purchase from the insurer that accounts for 22% market share.
The individual agents grossed premium revenue worth Rs 9,200 crore in 2012-13, whilst the company brokers generated Rs 4,700 crore in premium.
The study report prepared by the Economic Research Bureau of the Associated Chambers of Commerce and Industry of India (Assocham) further indicated;
Motor insurance holds the biggest pie of general insurance market, with a share of 47.05% in FY 12-13, and a reported growth rate of 22.24% from the total premium underwritten in the same year. It is a 33.38% growth as compared to the FY 11-12.
D.S. Rawat, Secretary General, Assocham commented, “The motor insurance segment will grow in tandem with the expansion in automobile industry. With regular arrivals of new car models and manufacturers in the Indian automobile market, a direct positive impact on the sales of motor insurance will be seen.”
He further said, “The improving income levels, rising demand for vehicles, expanding auto finance market and growing health awareness will all cumulate into a major factor in augmenting this sector.”
Assocham suggestions for Motor Insurers:
Today, customers prefer to purchase services-based insurance cover. For example, customers opt for a policy that offers enhanced hospitalization cover, personal accident cover and zero depreciation motor insurance cover. Therefore, the industry must evaluate the changing consumer behavior, adopt suitable strategies, and devise unique plans that render additional assistance such as spot repairs, towing and fuel assistance on a highway.
The study says unavailability of valuable market data prevents the insurers to price a risk. Today, the policies are priced based on the vehicle’s manufacturing year, engine capacity, area of the purchase, usage of the vehicle, credit score and occupation of the driver. But if we have to move forward with the market expansion, we need a pragmatic pricing of the motor insurance policies.
The study suggests that insurers must streamline their claims settlement procedure, wherein the insurance company can directly interact with the claimant and improve their opportunity to prove their worth among competitors.
Source: This news was published on May 20, 2015 in economictimes.indiatimes.com under the title: “General insurers’ premium from motor vehicle insurance to touch Rs 38,200 cr: Assocham”