Motor Ads Formed Chunk Of Icici Lombards Ad Spend

ICICI Lombard General Insurance Company spent Rs 1.85 crore on advertising during 2001-02, of which over Rs 1.8 crore was accounted for by ad spend on the sale of motor insurance business alone.

According to the balance sheet of the Indian promoter, ICICI Bank for fiscal 2002, total claims incurred by ICICI Lombard amounted to Rs 1.78 crore.

Over 76 per cent of the total claims figured out of writing motor insurance business of Rs 1.36 crore. ICICI Lombard has paid claims to the extent of Rs 56.88 lakh, of which Rs 11.37 lakh has come by way of reinsurance.

The balance Rs 91.42 lakh amounted to claims outstanding as on March 31, 2002. As on March 31, 2002, total claims to the extent of Rs 1.23 crore remained outstanding as per the balance sheet of the company.

While total operating expenses incurred by the general insurer stood over Rs 12 crore, over 55 per cent was on account of expenses incurred on selling motor policies, amounting to Rs 6.76 crore. Expenditure on the sale of fire insurance business was comparatively much less at Rs 3.32 crore.

A substantial amount of the expenditure incurred in the motor insurance business was on account of ad spend (27 per cent) and employees' remuneration and welfare benefits (27 per cent).

The high level of expenses in this category of business is partly on account of the need for a widespread distribution network as ICICI Lombard went retail in selling motor policies. Further, it spent sizeable amounts in legal and professional charges (Rs 8.65 crore). It spent much less in the case of legal expenses when it came to selling fire policies.

ICICI Lombard has earned more in commission by ceding reinsurance business, netting a commission of Rs 4.5 crore against a commission outflow of Rs 46.99 lakh to its agency force.