Two top officials from Shriram General & Magma HDI share insights on motor insurance expansion through advanced technology & strategic partnerships:
The insurance industry has experienced significant growth driven by evolving demographics, a thriving economy, and favorable regulatory decisions. This impact is particularly evident in the Motor Gross Written Premium (GWP), which has seen substantial growth over the past few years.
Shashi Kant Dahuja, Executive Director and Chief Underwriting Officer of Shriram General Insurance, shares: “According to the General Insurance Council report for FY23-24, the industry grew by 12.77. Shriram General Insurance registered a growth of 34% in the motor line. As our major portfolio consists of the motor category, the growth registered in FY23-24 in this segment is 33%. We recorded a 27% growth in FY21-22, 28% in FY22-23, and 33% in FY23-24. It is noteworthy that from FY21-22 to FY23-24, SGI in the motor segment grew by 70%, writing over 4.4 million policies in 2023-24.”
Vikas Mittal, Deputy CEO of Magma HDI General Insurance, shares: “At Magma HDI, our GWP within the motor line of business has grown by 25.5% over the past 3 years. This increase underscores our commitment to excellence and our ability to effectively meet the evolving needs of our customers.”
Customer Segments
In FY24, overall motor industry sales registered a growth of 12.5%. Sales of private cars registered a growth of 8.4%, while commercial vehicles registered a 14.4% growth, followed by 2-wheelers at 13.3%.
Vikas reveals: “Amidst this flourishing landscape, we at Magma HDI have navigated the market with a meticulously crafted multi-channel distribution strategy that transcends geographies, products, and customer segments. Our partner network, developed over many years and specializing in commercial vehicles and private cars, has delivered a growth rate of nearly 32% over the last 3 years. The share of the private car segment has been steadily increasing in our portfolio, highlighting our balanced approach to market expansion.”
In the current financial year, SGI is strategically focusing on the heavy commercial vehicle and tractor segments. This decision is driven by the significant potential these segments hold in enhancing insurance penetration across the country. By targeting these essential and high-value vehicle categories, SGI aims not only to meet the growing demand for comprehensive coverage but also to contribute to the broader objective of increasing insurance adoption.
This has led SGI focus on providing tailored insurance solutions that address the specific needs of commercial vehicle operators and farmers, thereby fostering a more robust insurance landscape.
Leading Vehicle Segments
Goods-carrying commercial vehicles (GCCV), private cars, and passenger-carrying commercial vehicles (PCCV) make up the largest portion of SGI’s total portfolio. The GCCV segment registered a growth of 41% in FY23-24, followed by private cars and PCCV with 32% and 30%, respectively. Over the past 3 years, the GCCV segment has demonstrated the highest growth rates.
For SGI the tractor segment showed a growth of 65% in FY23-24. This notable expansion highlights the significant demand and potential within these categories. The insurance company has decided to maintain a strong focus on these segments, aiming to leverage the robust market trends and capitalize on the growth opportunities. This strategic focus will help the company to enhance its market presence and drive further success in the commercial vehicle insurance sector.
Top Growth Regions
Motor insurance growth varies due to factors such as the number of vehicles, increased economic activities, enhanced infrastructure development, and awareness levels about the importance of vehicle insurance.
For SGI, the top 3 states contributing to SGI’s vehicle insurance business are Karnataka, Tamil Nadu, and Uttar Pradesh. The states with the maximum growth are Gujarat, Telangana, and Karnataka, with 60%, 58%, and 58% growth respectively in FY23-24 compared to FY22-23. The state-wise growth is very encouraging, and it is noteworthy to mention that 22 states in India have registered growth above 33%, contributing to its overall motor GWP growth.
Magma HDI General Insurance has a PAN India presence, and each vehicle type has its unique attributes impacting business growth. In the motor vehicle segment, the company has experienced higher-than-average growth rates in north and west India.
Customer-Centric Initiatives
Claim settlement is a critical factor in increasing customer satisfaction within an insurance company. Efficient and timely resolution of claims not only fulfills the core promise of the insurance product but also builds trust and loyalty among policyholders.
Shriram General Insurance Claim settlements improved in FY24, with the number of settled claims rising to 1.81 lakh from 1.47 lakh (in FY23), with the claim settlement period decreasing steadily.
Magma HDI General Insurance believes that customer satisfaction and experience are perpetual endeavors. Today’s insurance customers not only compare their experiences within the industry but also with the streamlined services of e-commerce giants like Amazon. To demystify the complex and perplexing nature of the insurance industry, Magma HDI diligently reassesses all processes, ensuring that ‘empathy for customers’ remains at the core of its endeavors.
Vikas adds: “This empathetic approach permeates various customer journeys, including the policy purchase process, where we are dedicated to continually refining and simplifying the buying experience.” The company’s foremost objective is to ensure the equitable and prompt settlement of every claim. The company harness advanced technology to realize this goal, achieving cost-effective scalability in its claims and customer service while upholding the highest service standards.
To provide timely and effective assistance to customers when they need it most, Magma HDI has implemented an AI-driven tool for external damage detection and severity assessment in private car own damage (OD) claims. This advanced technology reduces data entry time and markedly enhances efficiency. To date, more than 75,000 private car OD claims have been successfully processed using this AI tool at Magma HDI.
Automation & Digital
Robotic Process Automation (RPA) is a technology that uses software robots or ‘bots’ to automate repetitive and routine tasks typically performed by humans. By automating repetitive tasks through RPA, Magma HDI has alleviated the workload on its teams and, more importantly, enhanced the precision and speed of service for its customers. Vikas says: “This transformative initiative has significantly streamlined our sales operations and finance functions, allowing us to deliver superior turnaround times (TAT) to our valued customers throughout their policy journey.”
Magma HDI General Insurance’s steadfast dedication to technology and customer insights has enabled it to provide services that are seamless, efficient, and finely tuned to customers’ needs, reaffirming its promise to deliver the highest standard of customer experience and service.
Shriram General Insurance has issued about 83% of its policies through digital mode in FY23-24 and hopes to reach 100% in the next 2 years. Shashi Kant added: “We have introduced user-based innovative products like the Shri Motor Protection policy with a legal aid add-on, pay-as-you-drive options, etc. Its expansion into tier 3 and tier 4 cities aimed at increasing insurance penetration has also supported higher levels of customer satisfaction.”
Tie-ups & Distribution
Shriram General Insurance, through partnerships with regional rural banks and microfinance companies, aims to extend its insurance services to underserved communities, thereby enhancing financial inclusion and providing essential risk protection to these populations.
Shashi Kant delves deeper: “By leveraging the extensive reach of regional rural banks and the grassroots network of microfinance institutions, we are able to deliver accessible and affordable insurance solutions tailored to the unique needs of the rural population.” Additionally, SGI is associated with an extensive broker network, which is significantly contributing to its insurance business.
Magma HDI General insurance’s multi-channel distribution strategy, supported by an extensive network of over 18,000 agents and brokers, has been pivotal in delivering consistent and reliable service across various customer segments. Vikas shares: “In FY24, we established numerous new partnerships, including those with banks, NBFCs, and 5 automotive OEMs, some of which focus on the emerging electric vehicle segment.”
Behavioral Economics
Magma HDI, in collaboration with a German consultancy firm, has seamlessly integrated ‘Behavioral Economics’ principles into its call center operations. Behavioral economics analyzes the economic decisions people make based on factors like rationality, choice architecture, and cognitive biases. Magma HDI’s tele-calling team is adeptly trained to discern and classify customers according to pre-defined psychographic segments such as bargain hunters and risk avoiders. This nuanced approach empowered the company to tailor its interactions with exquisite precision, delivering a bespoke and effortlessly personalized experience for each customer.
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