Description
Motor Insurance: A Study on Claim Losses
A Study on Claim Losses of Motor Insurance Companies in India
]
• Indian Insurance markets are seen as large and lucrative
• Opening up of Insurance to the private sector has resulted in the entry of several new private sector players
• • • •
World’s second largest population One of the largest economies in the world Growing at 8% p.a. Middle class population equal to entire US population • Affordability of cars due to financing schemes
• However, the downside is not to be underestimated • Large number of young, first-time drivers • Illiterate drivers • Poor driving and parking etiquette • Bad roads • Poor traffic management
• • • •
Worst road accident record 200,000 fatalities per annum High moral, morale hazard, physical hazard Claims exceed premiums (>100% loss ratio)
• Despite high claim ratio, firms attracted to Motor Insurance
• Reason: Cash flows due to ‘compulsory’ nature of motor insurance
• Problem: Can losses be managed?
• What could be the pattern if losses are managed?
•
• • • •
A (Accident)
Existing 2/100 Growing 7/130 Correction 3.2/160 Mature 1.7/170
B (No Accident)
98/100 123/130 156.8/160 168.3/170
• The percentage of accidents, viz. 2%, 5.3%, 2% and 1% shows the gradual transition from high to medium risk zone, in relation to to global standards
• It also calls for an upward adjustment in premium before a gradual reduction. This will be possible under deregulated tariffs.
• Tariff Advisory Committee (TAC) controls the premium rates
• Under decontrol of tariff, product innovating and differential pricing will arise
• Survey: 24 officers across 7 companies
• • • • • Frequency of Claims: 1. Cars 2. Trucks 3. Buses (low in Mumbai, Maharashtra) 4. Two-wheelers (low on account of excess)
• Survey: 24 officers across 7 companies
• • • • • Magnitude of Claims: 1. Trucks (very high in Punjab, Haryana) 2. Buses (Very high in Punjab, Haryana) 3. Cars 4. Two-wheelers (low)
• Risk mitigation areas:
• Drivers • Traffic Regulators • Local Governments
Thank You
doc_262658566.ppt
Motor Insurance: A Study on Claim Losses
A Study on Claim Losses of Motor Insurance Companies in India
]
• Indian Insurance markets are seen as large and lucrative
• Opening up of Insurance to the private sector has resulted in the entry of several new private sector players
• • • •
World’s second largest population One of the largest economies in the world Growing at 8% p.a. Middle class population equal to entire US population • Affordability of cars due to financing schemes
• However, the downside is not to be underestimated • Large number of young, first-time drivers • Illiterate drivers • Poor driving and parking etiquette • Bad roads • Poor traffic management
• • • •
Worst road accident record 200,000 fatalities per annum High moral, morale hazard, physical hazard Claims exceed premiums (>100% loss ratio)
• Despite high claim ratio, firms attracted to Motor Insurance
• Reason: Cash flows due to ‘compulsory’ nature of motor insurance
• Problem: Can losses be managed?
• What could be the pattern if losses are managed?
•
• • • •
A (Accident)
Existing 2/100 Growing 7/130 Correction 3.2/160 Mature 1.7/170
B (No Accident)
98/100 123/130 156.8/160 168.3/170
• The percentage of accidents, viz. 2%, 5.3%, 2% and 1% shows the gradual transition from high to medium risk zone, in relation to to global standards
• It also calls for an upward adjustment in premium before a gradual reduction. This will be possible under deregulated tariffs.
• Tariff Advisory Committee (TAC) controls the premium rates
• Under decontrol of tariff, product innovating and differential pricing will arise
• Survey: 24 officers across 7 companies
• • • • • Frequency of Claims: 1. Cars 2. Trucks 3. Buses (low in Mumbai, Maharashtra) 4. Two-wheelers (low on account of excess)
• Survey: 24 officers across 7 companies
• • • • • Magnitude of Claims: 1. Trucks (very high in Punjab, Haryana) 2. Buses (Very high in Punjab, Haryana) 3. Cars 4. Two-wheelers (low)
• Risk mitigation areas:
• Drivers • Traffic Regulators • Local Governments
Thank You
doc_262658566.ppt