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Auto insurance growth still positive at 4%, unlike auto sales numbers, says ICICI Lombard

Updated : August 29, 2019 04:18 PM IST

While auto sales continue to fall unabated, growth in the auto insurance segment is still positive, according to private sector insurer ICICI Lombard.

Explaining the impact of the slowdown in the automotive sector on insurance, which has seen a muted growth quarter, Bhargav Dasgupta, managing director and chief executive officer of ICICI Lombard said that while new vehicle sales are an important element of growth in the motor insurance segment, the company has other sources of business which have seen through the slump.

"We have an existing base of renewal policies for over a year old vehicles. There’s a very low level of penetration. Currently, we believe more than 50 percent vehicles playing on roads don't have insurance. So, we are seeing an increase in penetration. Obviously, new vehicle sales have an impact. For auto insurance, growth is about four percent this quarter, not a negative number unlike headline numbers for auto sales," Dasgupta told CNCB-TV18.

On the broader growth outlook for the insurance sector, he said growth in the first quarter has been muted at 9.9 percent, although better than the overall economy.

"In the medium term, the industry will continue to grow 15-20 percent, and we aspire to grow at that level in our preferred segments of business," Dasgupta told CNBC-TV18.

"This year will probably see relatively lower growth than what we have seen in the past. My guess will be between 10-15 percent this year," he added.

Responding to whether ICICI Lombard will look to start a separate health insurance subsidiary, Dasgupta said the company will stay multi-lined.

Further, Dasgupta said, "A separate health insurance subsidiary is not in the plan. At this stage of economy and industry, companies that are multi-lined, multi-speciality stand better in the market. Each of the sectors growing pretty well at this time, and customers expecting multiple products from insurance companies. Staying multi-lined makes more sense for us."