21-08-2020
Online motor insurance revs up
Insurance AlertssOnline motor insurance revs up
Digital motor insurance offerings are disrupting a fragmented insurance market in India, according to industry executives.
A population of 1.38bn that is continuing to grow and the soaring aspirations of India’s populace are presenting the opportunity for motor insurance companies to tap large volumes of prospective consumers, reported Forbes.
According to the Indian insurance regulator, motor insurance business reported a growth rate of 8.91% to take a share of 38.08% of the total general insurance business in India in 2018-19. Just the previous year to 2018, motor insurance premium figures revealed it was the best performing non-life insurance segment in India with gross direct premiums of INR592.5bn ($7.9bn).
There are several channels for customers to buy motor cover online. These include:
- Direct purchase via insurance companies’ websites
- Purchase via online marketplaces
- Purchase via global technology companies offering insurance (eg. Amazon).
That technology companies are eyeing the large insurance market in India indicates how rapidly the market is evolving to suit consumers’ changing preferences and provide them the ease of access and processes.
Challenges in motor insurance
Mr Sanjay Datta, the chief of underwriting, claims & reinsurance at ICICI Lombard, finds negligence among the top reasons for consumers faulting on motor insurance covers.
Customers tend to buy insurance while buying a new vehicle as a compliance measure and some of them even continue to renew their insurance policies for a couple of years later. However, beyond 3-4 years, they feel insurance is no longer required. This behaviour is more prevalent outside metro cities where compliance pressure isn't as much.
Second, fierce competition has turned the category into discount wars. Most customers focus primarily on prices and at times are unaware of the various features and service quality aspects of their motor policies such as the claim settlement ratios, among others.
Lack of discipline
At least 58% vehicles registered in India are uninsured despite third-party insurance being mandatory.
The majority of Indian consumers without an insurance cover are commercial vehicles and bike owners, with a heavy skew in semi-urban and rural geography as compared to metro and urban customers, explains Abhishek Tiwari, the CEO of iAssure.
Mr Tiwari finds private car owners in metro and urban locations are relatively more disciplined but cautions both bike and commercial vehicle customers in the same geographies need better vigilance and monitoring.
He thinks lack of awareness is among the main reasons for the current state of motor insurance adoption by Indians.
Source: Asia Insurance Review
