Insurance: General players enjoy a good November

This likely indicated interest in buying motor TP polices, as a consequence of increase in penalties for traffic violations.

General Insurance companies reported 16% y-o-y growth in premium in November 2019, improving from 11% in October. Motor business continues to moderate on the back of weak OEM sales and moderating TP business, while fire and health have helped offset the weakness. Large private players, ICICI Lombard (down 6% y-o-y, up 7% ex-crop) and Bajaj (up 8% y-o-y) and HDFC ERGO (down 30% y-o-y, up 8% ex-crop) posted weaker-than-industry numbers. Chola MS (up ~14% y-o-y) was in line while SBI (up ~40% y-o-y ex-crop) maintained robust performance.

Motor TP moderation continues; motor OD remains weak

Motor segment reported 6% y-o-y premium growth in November 2019, moderating from the 15-20% growth seen in the last two months. The immediate reaction to new traffic penalties on motor TP premiums seems to have almost faded. Motor TP moderated sharply to 10% y-o-y (22% in October, 16% in YTD FY2020). OD business premiums were flat y-o-y in line with YTD run-rate after witnessing the first month of premium growth in October that was likely led by the festive season sales. Private sector continued to gain market share registering 11% y-o-y growth while PSUs reported a decline of 4% y-o-y.

OD business was back to flat growth in November after registering 8% y-o-y growth in October 2019, reflecting weak OEM sales. Among large private players, motor OD premium growth for Bajaj (~15% y-o-y) and Chola MS (~11% y-o-y) was better than the industry while ICICI Lombard posted 6% decline in premiums. Acko and Go Digit remained the fastest while SBI General maintained momentum at ~60% y-o-y growth.

TP business moderated sharply to ~10% y-o-y in November 2019. Premiums had spiked in September (up 38% y-o-y) moderating to 22% in October, which was a reaction to increased traffic penalties coming into effect. Private players posted 16% growth while growth for PSU players was muted (3% y-o-y). Go Digit (up 3X y-o-y) continued to witness robust traction. Among top private players, Bajaj (up ~24% y-o-y), HDFC ERGO (up ~27% y-o-y) and Chola MS (~up 12% y-o-y) posted better-than-industry growth rates while ICICI Lombard has seen weakness with premiums declining ~14% y-o-y. SBI General continued to record strong growth rates on a low base, up 2X y-o-y.

Google trends back to normalised levels: Google trends showed a sharp rise in search of the term ‘motor insurance’ in last week of August. This likely indicated interest in buying motor TP polices, as a consequence of increase in penalties for traffic violations. The trends suggest that interest has moderated to normal levels.

TP headroom limited to 6% of overall premiums: The headroom for premium growth may be `100 bn i.e. 26% of TP premiums or 6% of overall industry premiums.