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ICICI Lombard rebalances motor insurance portfolio after govt decision

As a result of rebalancing, motor gross direct premium income (GDPI) mix for commercial vehicles decreased on a year-on-year basis during Q1FY24, while that of both private cars and two-wheelers increased.

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Last Updated - September 11, 2023
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ICICI Lombard General Insurance has ‘rebalanced’ its motor insurance portfolio after the government did not increase annual motor third party premiums for any of the classes of vehicles for the current fiscal.

As a result of rebalancing, motor gross direct premium income (GDPI) mix for commercial vehicles decreased on a year-on-year basis during Q1FY24, while that of both private cars and two-wheelers increased.

In the motor GDPI mix for the company, share of commercial vehicles fell 360 bps y-o-y to 21% in Q1FY24. But, shares of private cars and two-wheelers increased 100 bps and 260 bps to 48.7% and 30.3%, respectively.

“With no Motor TP price hike, we have rebalanced our portfolio, resulting in our commercial vehicle mix at 21% and two-wheeler mix at 30.3% for Q1FY2024,” MD & CEO Bhargav Dasgupta said during the company’s earnings conference call.

The insurer on Tuesday reported a 11.84% year-on-year rise in its net profit to Rs. 390.36 crore for the June quarter as gross premium written increased 19.75%.

Contrary to expectations of the general insurance industry, the government on June 14, proposed no change in annual motor third party rates for most of the classes of vehicles. Moreover, in some cases, it even proposed to reduce rates. For private cars, two wheelers, goods carrying commercial vehicles (other than three-wheelers) and goods carrying motorized three wheelers, among others, rates remained the same.

In the motor segment, ICICI Lombard growth was tepid at 5.3% in Q1. The company witnessed a month-on-month growth in new private car insurance segment during the quarter, Dasgupta said.

“For motor own damage, ICICIGI is re-balancing its portfolio to bring down the share of OEM channels to 60-65% (from 75-80%). Growth in the private car segment is also coming back on track,” HSBC Global Research said in its report on Wednesday.

“The health insurance segment continued to be the fastest-growing one for the industry. During the quarter (Q1FY24), we grew at 40.4%, which was higher than the industry growth of 20.7%,” Dasgupta said.

“In recent years, ICICIGI’s management has strived to resolve the conundrum of growth-profitability balance; the Q1 developments illustrate that the management is on the right track,” Emkay said in its note.

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