Which segments were heavily impacted due to the lockdown?
We saw the industry contract, we as a company also contracted. However, our contraction was lower than the industry. Further, the B2B (business-to-business) segment, mainly comprising of corporates and enterprises, was protected. In the health segment, we have seen inquiries rise. In fact, we have seen some growth in the health indemnity segment. The contraction has mainly come from the motor insurance segment. We also witnessed contraction in policies we write as an attachment to loans with non-banking finance companies
(NBFCs), housing finance companies
(HFCs) and bancassurance partners.
Will non-Covid claims see an exponential rise once things normalise?
We sense that there will be a surge. Some medical management cases have gone down, and we feel that they will stay low. Having said that, we are seeing claims inflation. For the same treatment, we are experiencing that the average claims size is increasing probably because of consumables. Also, there is pressure on hospitals to increase treatment costs. So, that might have some impact.
What is your take on standardisation of rates for hospitals?
There is an urgent need to standardise rates at hospitals, and it could be based on daily costs or depending on the different facilities used. The reason we need that is because it will smoothen the process for customers as there won’t be any dispute with hospitals. Also, we have to protect the sum insured of the policyholders. We have seen hospitals charging about Rs 10 lakh for Covid-19 treatment. Policyholders are using their entire sum insured for one treatment. There should be an agreement on a fair price that satisfies buyers and providers.
The motor segment has been under stress for some time now. What is your assessment?
In April, new vehicle sales were virtually zero, so the segment has contracted by almost 50 per cent and renewals are not happening on time. There is a view that once things open, people will prefer personal vehicles over public transport. If this happens, there is a possibility of a rise in demand for two-wheelers, and smaller private cars. Also, the government might come up with initiatives for the industry to spur demand. If that happens, our motor portfolio will also do well. However, the outlook for commercial vehicles seems to be more muted, and that is where a vehicle scrappage policy will come in handy.
Underwriting is of critical importance for the long-term health of the non-life industry, because unless you make reasonable underwriting returns, the quality of service gets impacted.