State owned non-life insurance companies, that once upon a time were the preferred insurers for buying a motor insurance policy, are fast losing their mass appeal to private insurers pointed out a survey by JD Power Asia Pacific.
Private insurer ICICI Lombard has been ranked first in terms of policy purchase experience, policy offerings; and price for coverage offered followed by state-owned Oriental Insurance in the survey. Insurers that fared badly were Iffco Tokio, Royal Sundaram, HDFC Ergo, Reliance General, United India and Tata-AIG. “Public sector insurers have to reform themselves if they have to survive, said Mohit Arora, senior director at JD Power.
The 2009 India Auto Insurance Customer Satisfaction Study is based on evaluations from 4,445 auto insurance policyholders in 20 cities who renewed or purchased an auto insurance policy between January 2008 and April 2009 and were at 2.5 to 3.5 years of vehicle ownership. Customer satisfaction was measured across six factors: interaction; claims; product/policy offerings; renewal/purchase of policy; billing and payment process; and premium/price for coverage offered.
Surprisingly, only 20 per cent of the total policyholders filed a claim but this resulted in a loss ratio of 120 per cent for insurers.
“Premiums for car insurance are pathetically low in India with the average premium being 2 to 3 per cent of the car price unlike abroad where it is 8 to 10 per cent. There is an increased focus among insurers on lowering the premium. The current situation will accentuate if these differences are not addressed,” said Arora.