Public Sector General Insurers Losing Motor Segment Share Very Fast – Lost 30% Business Since FY18
That the decline is so stark for the public sector players is clear from the FY18 market share number when they held 46.5 percent of the total motor segment premia, while private players had only 53.5 percent then.
Even as the motor insurance segment, which had a massive decline in FY21, is returning to the growth path, public sector general insurers have been steadily losing ground to the private insurers overall and more so in the bread and butter motor segment, with pie crimping to 32.6 percent in August, down from 36.6 percent a year ago.
As against this, the private sector has improved their market pie to 67.4 percent in the reporting month from 63.4 percent in the same period last year, shows an analysis of the monthly data by Care Ratings.
That the decline is so stark for the public sector players is clear from the FY18 market share number when they held 46.5 percent of the total motor segment premia, while private players had only 53.5 percent then.
Come FY19, the respective share declined to 40.7 per cent for the public sector while jumped to 59.3 percent for the private players. The share of public sector players declined to 36.8 percent in FY20 and further dropped to 34.2 percent in FY21 while that of private players rose to 63.2 percent in FY20 and further accelerated to 65.8 percent in FY21, according to Care report.
Similarly, in FY18, the public sector had a market share of 37.5 percent of the motor OD (own damage) market, and the private players had it 62.5 percent, which declined and increased respectively to 32.5 percent and 67.5 percent in FY19 and further to 28.3 percent and 71.7 percent, respectively in FY20.
In FY 21 the respective shares were 25.5 percent and 74.5 percent. In August 2020 the pie was 27.8 percent and 72.2 percent and which further declined to 24.3 percent and 75.7 percent respectively.
It’s only in the motor TP (third-party) segment that the public sector has some leeway as they had a market share of 52.7 percent as against private players’ 46.3 percent in FY18, but within a year they lost that too. In FY19 it declined to 46.5 percent and to 42.2 percent in FY20 while for private players the pie increased to 53.5 percent in FY19 and to 57.8 percent in FY20.
In the last fiscal, the share of public players was at 39.7 percent and private players at 60.3 percent. In August 2021, this is at a low of 38.3 percent for the public sector, down from 42.3 percent in August 2020, as against private players’ 61.7 percent and 57.7 percent. This downtrend is particularly important for the public sector player as the motor TP segment has emerged as the larger segment driving the overall motor insurance growth.
According to industry data, there were over 23.12 crore vehicles on road in the country as of March 2019, of which 57 percent were uninsured vehicles. Two-wheelers were the largest component of the uninsured vehicles with over 60 percent of them being uninsured, whereas uninsured cars were only 10 percent, showing massive potential for growth.
In FY21, the motor premium had declined after the pandemic but retained the top spot which it has ceded in FY22 to the health segment. This is also in line with the international market, where health is significantly larger than the motor segment. The Motor TP segment has continued to grow faster than the Motor OD segment.
Amongst the states, Maharashtra continues to occupy the top spot followed by Tamil Nadu, Karnataka, and Uttar Pradesh in the motor business for insurers. The report expects motor insurance premia to grow at 6-8 percent driven by an increase in TP rates, and auto sales for the full year, despite the chip shortage.
(PTI)
