Chart Beat: Third-party motor insurance still a sore point for non-life insurers
Third-party (TP) motor insurance has seen a continued decline in performance, with a notable decrease in a key metric in December. Last month, gross direct premium growth for this segment was just 6% year-on-year, a drop from the 7% increase recorded in the preceding two months, according to data from the General Insurance Council and the Insurance Regulatory and Development Authority of India (Irdai).
This downturn, in turn, impacted the overall performance of the non-life insurance industry in the December quarter (Q3FY24). Analysts at Kotak Institutional Equities have pointed out that the motor TP business has been consistently weak over the past four months.
A likely cause for this decline is the reduction in policy renewals following the mandatory renewal period introduced in 2018, which lasted for five years. To recall, in 2018, motor insurance companies were required to offer a mandatory three-year TP insurance policy for cars and a five-year TP cover for two-wheelers.
This mandate aimed to tackle the issue of policy non-renewal by vehicle owners post-lapse. Against this backdrop, management commentaries in the upcoming Q3 earnings call from major players in this segment, such as ICICI Lombard General Insurance Company, will be pivotal.
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