Wednesday, 14 December 2016

Effect of demonitization on general insurance business in India


New motor insurance business: Since, new motor insurance business is directly related to the new car sales it has seen its impact accordingly. In A class cities mostly insurance companies were short of their targets by 12 to 15%. In B class cities where rotation of cash is more prominent a negative impact of 7 to 10% has been reported by almost all insurers. PSUs where business is significant from B and C class cities have seen an overall impact of around 12-15%.

 

Renewals-Motor: The impact in A class cities has been very limited as most of the insurers have performed at above 90% expected levels. Availability of e-payments and already being widely used are the reasons that renewals are not much affected in A class cities. B and C class cities have seen delayed renewals and the impact has been 20 to 22% on negative side.

 

Non-Motor insurance: Health insurance has seen impact on new acquisition side and targets were short by as high as 25% in B and C class cities. A class cities have seen the impact of 15%. Renewals are not affected much due to nature of product.

 

Other line of business: Rural market has been under impact and PSUs have suffered due to the same as seen in many products like agricultural, small ticket personal accident covers, cattle insurance and agriculture insurance have seen the impact.

 

In totality, the actual impact can be measured in next 2-3 months as there may be delayed purchase decision which may actually come into account once the situation becomes normal. Still, industry can’t deny the impact of 15% impact on business across the cities and segments.