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The upcoming festive season from September to November is expected to drive better demand for new automobiles, which could in turn boost the motor insurance sector.
During the Dussehra-Diwali period, the sector could witness a growth of upwards of 20 per cent, aided by new product launches in the two-wheeler and four-wheeler space, experts said.
At present, motor insurance and health insurance take up 65-70 per cent of the overall business and premiums for the sector. While the average ticket size for auto insurance is not very high, the volumes are high.
Roopam Asthana, CEO of Liberty Videocon General Insurance, explained that motor insurance would see better growth numbers in the second half of the financial year compared to the first half of FY16, thanks to the new auto launches.
The arrival of new models in the market would increase insurance purchase as well, with third-party (TP) motor insurance being mandatory in the country. The new launches for the festive season in the two-wheeler and four-wheeler segment would include Mahindra TUV300, Renault Kwid and a new Bajaj Pulsar 200SS, among others.
Sanjay Datta, chief (underwriting, reinsurance and claims) at ICICI Lombard General Insurance, said: “We have seen a good uptick in insurance sales in motor during the festive season. Dealers also come up with better options and we are hopeful that the theme continues this year as well.”
Motor insurance segment had seen some slowdown in sales in the last financial year, with auto sales being under pressure. However, it came back on track with vehicle sales improving. Overall, the non-life insurance sector’s growth in FY15 was lower than the previous year’s due to slowdown in the motor segment.
The Insurance Regulatory and Development Authority of India (Irdai) has brought out an exposure draft on obligation of the insurer with respect to motor TP insurance business.
According to this, insurers should underwrite a minimum percentage of their business.
This percentage would be equal to the simple average of insurers’ share in the gross premium as well as total motor insurance premium of the sector in the preceding financial year. According to Irdai, insurers cannot refuse motor TP cover to any individual/entity that approaches them.
