Motor TP spikes on new traffic penalties
General insurance companies reported 18% yoy growth in premium (excluding crop) in September, higher than 7-11% yoy growth over the past 3 months. Motor insurance premium growth improved to 21% yoy in September 2019 post recording a muted 1-10% yoy growth in April-August 2019. Motor TP (3d party) improved to 38% yoy (YTD growth of 16%) due to new traffic penalties. Growth in the private sector improved to 31% yoy. PSUs reported muted 7% yoy growth, positive growth for the first time YTD, according to Kotak Institutional Equities Research report.
OD (own damage) business remained weak with 7% yoy growth for private players and 21% yoy decline for PSUs, leading to a 2% decline for the industry, likely indicating weak new vehicle volumes. Motor OD premiums for BajajAllianz, ICICI Lombard and HDFC ERGO were in line with industry trends while Acko and Go Digit remained the fastest. SBI
General was up 31% yoy. Rise in penalties led to sharp increase in motor TP premium in September 2019 (up 38% yoy, up from 10-18% in the past 3 months). Growth for private players, ex Acko and Go Digit, was up 33% as compared to 4-16% yoy growth in April-August 2019. PSU players reported 22% yoy growth compared to 3% YTD decline in 5MFY20. Among large players, SBI General and HDFC ERGO surprised with 79% growth growth in past 5 months and 93% yoy, respectively. Bajaj was up 53%, from 11-18% in the previous 3 months.
Google Trends suggest peaking out and that interest has moderated, impliy moderation in TP premium. Motor insurance saw a spike at the end of August 2019 on Google search trends prior to declining to normalized levels in October 2019. The headroom for premium growth may be `100 billion, ie 26% of TP premiums or 6% of overall industry premiums.