Technical Insight
Connected Auto Insurance – A Blueprint in Indian scenario KAMAL AGGARWAL
SenSight Technologies Private Limited
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otor Insurance segment in India has seen significant growth in the last decade fueled by increase in the private vehicle ownership in India across 2-wheeler and 4-wheeler segment. Along with the increase in vehicle ownership, gradual increase in insurance premium per vehicle and Third-Party Insurance becoming mandatory has led to an average CAGR of roughly 15% in overall Auto premiums over the last 10 years in India. However, this vibrancy in the market has also resulted in a high intensity of competition in the space with roughly 25 Insurers vying for the same customer. These Insurers include the legacy Public Insurers who have been steadily losing market share to the aggressive Private Insurers whose count has increased in the last few years.
6 | Telematics Wire | February 2022
Pandemic induced lockdowns have resulted in reduced mobility and slower sales of new vehicles sales. These have impacted the Auto Insurance premiums in the short term and several Non-life Insurers have focused their attention on the Health Insurance segment of their business in this time. Motor Insurance remains a large segment of the portfolio and with huge head room for long term growth, given the low vehicle ownership in India. Still the key challenges facing the Auto Insurance players include: ● High intensity of competition – Cost of attracting and retaining customer has been going up as indicated by the growing percentage of sales commission paid to agents and brokers. Insurers are competing across the physical and digital channels to attract and retain customers.
Separation of Third party and Own damage has further eroded the pricing flexibility. ● High Loss ratios - Net Incurred Claims Ratio have remained high resulting in overall underwriting losses for most Insurers. This also indicates a mispricing of true risk and other leakages in the system such as high claims fraud. ● Lack of differentiation - From a vehicle owner point of view, Motor Insurance is increasingly becoming a commodity product with similar offerings from different players. Apart from the occasional touch point when one is renewing the Insurance or filing a claim, there is hardly any engagement with the Insurer. While the process of selling and issuing Insurance has become digital, ongoing digital engagement between the
