Non-life premium collection up, courtesy rising auto sales

Riding on the back of rising auto sales last month, the non-life insurance industry has recorded a marginal rise in premium collection.

According to data collated from companies, the general insurance industry recorded a growth of 6.72 per cent in premium collection to the tune of Rs 11,684 crore in April-July 2009 as against Rs 10,947.8 crore in the corresponding period last year. The industry has grown at 4.57 per cent during the April-June 2009.

In the current financial year, while private players grew at 4.21 per cent in April-July compared to 1.21 per cent in April-June, the public sector ones reported a 8.52 per cent growth in April-July as against 7.01 per cent in April-June.

In July, auto sales zoomed 24.3 per cent. While domestic car sales were up 31 per cent and commercial vehicles witnessed a 9.6 per cent increase in sales.

“Insurers see a surge in collection when auto sales go up. Although vehicle sales have risen, the unfortunate part is that premium collection has not shot up in line. Insurers are pricing more aggressively, which is bringing down their overall collection,” said Iffco Tokio Chief Executive Officer S Narayan.

Private players such as ICICI Lombard and Bajaj Allianz General Insurance have reported a decline of 18.3 per cent and 12.61 per cent, respectively, in premium collection. The third largest public sector insurer also recorded a marginal 0.13 per cent drop in collection.

ICICI Lombard General Insurance’s CFO and Director Rakesh Jain said, “There is one-month lag between consumers taking possession and booking a vehicle. Insurance comes into effect only after the vehicle comes on road. We can see the impact of robust auto sales in August collections. Market prices have bottomed out and we want some bit of correction and are writing business prudently.”

During the beginning of the financial year, insurers had expected that the industry to grow at below 10 per cent during 2009-10.