The Indian economy was displaying upward momentum in economic activity as reflected in an improvement in GST collection, strong manufacturing PMI, recovery in auto segments and growth in imports. However, the second wave of COVID will cause disruption in the economy with the imposition of partial lockdowns and increased uncertainty.
FY22 Guidance: Industry is expected to clock growth rate to the tune of 12-15%.Management has guided RoE to be in the range of 20% for the upcoming year.
Insurance Sector:
Industry growth back from an initial dip in H2FY21 in terms of Gross Domestic Premium Income(GDPI).
Industry clocked growth to the tune of 5.2% reaching GDPI of Rs 1987.4 in FY21.
The combined ratio of the overall industry stood at 110% in 9MFY21 and that of private players stood at 104.6% in the same period.
The government’s stance to increase the FDI limit from 49% to 74% will augur well for the sector in long term by providing capital to small players.
ICICI GI’s GDPI growth was mainly driven by a focus on preferred segments.
Motor :
Recovery in the auto sector with a preference for personal mobility has augured well for the motor insurance segment. However, the lockdown can impact auto sales in short term.
The average claim size of Motor Insurance is expected to increase after the court’s judgment, company has reassessed its Motor TP outstanding book and strengthened the reserves accordingly. The company does not expect any adverse impact on loss ratios due to these changes.
Fire and Marine: Growth in fire remained elevated in the first three quarters and has tapered off in the fourth quarter due to the base effect. Recovery in economic activity has led to improved traction in Marine and engineering especially from H2FY21.
Health: Individual health business registered a strong growth of ~22% YoY in FY21.
The digital platforms incubated by the company over the years continued to see enhanced adoption in recent times with over 97.0% of policies issued in FY21 are in paperless form.
The total number of claims for FY21 stood at 50,000 amounting to Rs 376 crore.
The company is focussing on using advanced technologies like AI, Machine Learning, etc not only in policy issuance but also for fraud controlling and claim to service.
Management is looking forward to its integration with Bharti AXA and the synergies are expected to play out from H2FY22. Currently, it is awaiting confirmation from NCLT and IRDAI in this matter.
The company is also focussing on expanding the distribution network to increase penetration in tier 3 and tier 4 cities. The number of agents as of March’21 stood at 59,545 as against 56,515 on March’20.
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