MUMBAI, Aug 4: The economic slowdown and falling auto sales are prompting general insurers to focus on retail segment and smaller towns.
Industry officials also say that there is an increasing focus on renewal premium, as the new premium growth from the motor, engineering segments has slowed.
“The general insurance industry will definitely be impacted due to the slowdown. As automobile sales are down, new premium collection will also dip. However, we are focusing on more personal line of businesses and entering into small towns to offset this,” general manager and whole-time director of New India Assurance K Sanath Kumar told.
Motor insurance is the single largest segment of general insurance industry.
However, slowing automobile sales and dearth of new projects have pulled down growth to around 12 per cent in June from an average of around 18 per cent in the past.
Further, drastic dip in commercial vehicle sales due to the halting of mining operations too impact the industry.
“Going forward, we will bring down our over-dependence on motor insurance to well below 60 per cent, and increase health insurance to about 20 per cent apart from growing the fire, engineering and marine portfolios significantly,” Reliance General Insurance chief executive Rakesh Jain said.
The industry is also facing the challenge of sustaining the investment income due to recent RBI tightening.
Most of the general insurers have posted sound growth from sale of investments in the first quarter due to fall in yields in government securities and other money market instruments.
However, due to the recent RBI liquidity tightening measures, investment income is likely to fall in the current quarter, said industry experts.
“As a company, we don’t focus much on investment income. Rather, our focus is on underwriting profit, which is core to our operations,” Bajaj Allianz General Insurance managing director and chief executive Tapan Singhel said, adding that company will focus on protecting the income of distributors. (PTI)
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