Motor insurance bleeds with lockdown, nearly 50% dip in April sales

BENGALURU: The lockdown has sent the insurance industry into a tailspin with every sector showing a sharp decline in April. Motor insurance was the worst affected with a 49% year-over-year dip in sales to Rs 2,621 crore for the month of April. Most other categories like marine, engineering, aviation, crop and personal accident insurance also saw declines between 5-40%.

Bucking the trend, health insurance was the only category posting a 5.4% increase in sales to Rs 4,509 crore during the pandemic. "More individuals are now aware of the need for health insurance given the high costs of private healthcare. But on the other hand some corporates wanted to cut costs and have asked if the number of dependents insured for employees can be reduced," said Dr S Prakash, managing director, Star Health Insurance Co.

Insurers say, sales under the lockdown were also impacted because IRDAI gave nearly a two-month grace period for premium payment for motor and health insurance policies.

While motor-insurance in total declined 49%, the fall was sharper in motor-owned damage which fell 51% to Rs 1,047 crore; than in motor third-party which fell 48% to Rs 1,574 crore. Motor third-party insurance is mandatory for all vehicles plying on Indian roads. But with the grace period given by IRDAI many commercial vehicles chose not to renew till the last day of the lockdown grace period - May 17, 2020, said insurers. Only private car and two-wheeler owners were prompt and renewed online or via their agents -- or the fall in sales in April would have been sharper, said insurers.

Fire insurance premium rose 41% in April to Rs 4,028 crore in April. "But this was more due to higher rates fixed by GIC Re for the year than the industry getting new business," said Atul Sahai, CEO, New India Assurance Co. Fire insurance policies mostly get renewed by March 31 - the traditional year-end business close for most corporates and industrial units; and new annual rates are then applied for renewed insurance policies.

Marine cargo and hull insurance fell 15% to Rs 436 crore. "With lesser movement under the lockdown, marine cargo is among our three loss-making segments now - the other two being travel and motor," said Sanjay Dutta, chief underwriting claims, ICICI Lombard General Insurance Co.

Avitation insurance did not fare as badly as expected with only a 5.7% dip in sales to Rs 76.51 crore in April. "These are annual contracts and airlines are always prompt with renewals; as when the lockdown lifts they will be back in business and will certainly need insurance more than earlier," said a DGM with United India Insurance Co.

Other miscellaneous forms of insurance, including crop saw a 39% fall to Rs 682 crore. This follows a government directive in February making it non-mandatory for farmers. Since the farmers' consent needs to be received before insurance coverage, it is possible this resulted in the dip, said insurers.

Source: The Times of India