Motor claims still on higher side

Motor insurance in India continued to be the largest non-life insurance segment with a share of 44.14 per cent (43.61 per cent in 2013-14). It reported growth of 10.52 per cent (14.15 per cent in 2013-14), according to the Insurance Regulatory and Development Authority of India (Irdai). But, losses with respect to claims have been high.

Overall, the net incurred claims of non-life insurers stood at Rs 55,232 crore in 2014-15 against Rs 49,179 crore in 2013-14. The incurred claims exhibited an increase of 12.31 per cent during 2014-15. Among the various segments, health insurance and motor insurance had a high claims ratio at 96.93 per cent and 77.14 per cent respectively.

In the motor insurance space, while premiums have seen a growth, rewards from compensation from third-party incidents had seen a 20-30 per cent growth.

The industry demands 40-60 per cent upward revision of motor premium every year. However, on an average, the premium goes up only by 15-20 per cent, increasing the load on insurers.

Irdai had earlier said looking into the sudden and adverse impact on policyholders by an increase in rates, they moderated the rate by increasing or decreasing the rate accordingly in some of the classes of motor insurance

Delays in resolutions of cases also had a cost effect on insurers. In order to provide a separate forum for dealing with cases relating to third-party claims in case of motor accidents, the Motor Accident Claims Tribunals had been set up under the Motor Vehicles Act. But, the number of cases pending before these tribunals was huge and the delay in decisions by these tribunals was also substantial.

Not having a minimum liability was one of the biggest issues in the industry. But, the new road safety and transport Bill had proposed maximum liability of Rs 15 lakh for insurers in third-party accidents. If this was approved by the legislature, then losses in motor insurance could be reduced.

Source: Irdai Annual Report 2014-15