The competitive landscape of the motor insurance industry in India has undergone a constant change during 2018-22. While there was close competition between New India Assurance and ICICI Lombard to occupy the leading position in 2022, the entry of new players in the top 10 list has changed the competitive dynamics of the country’s motor insurance industry, as they adopt technology to improve customer experience and gain market share, says GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the market share in terms of premiums held by the top 10 insurers decreased from 78.3% in 2018 to 71.2% in the financial year (FY) ending March 2023. The shift can be attributed to the underperformance of leading public sector insurers and aggressive strategies adopted by private insurers such as ICICI Lombard, Tata AIG, and Go Digit. As a result, premiums of public sector insurers, excluding New India Assurance, declined during 2018-22.

Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, comments: “Investments in technology to optimize operational efficiency and enhance customer experience, as well as strategic focus on product lines leading to new product developments, have supported private insurers to perform well compared to public insurers.”

Although New India Assurance retained its leading position as of March 2023, ICICI Lombard is catching up and might become the leading motor insurer in the following year. Similarly, Tata AIG increased its market share by 2.2 percentage points in the FY ending March 2023 and moved to the third position as compared to the seventh position in 2018.

Private insurers such as HDFC Ergo, and Go Digit have moved up in the ranking, whereas Oriental Insurance, which occupied the sixth position in 2018, did not feature among the top 10 insurers in the FY ending March 2023. The trend is expected to continue in 2023 and 2024.

Sahoo continues: “Leveraging technologies has been one of the major drivers of growth for private insurers. Implementation of machine learning, artificial intelligence (AI), and automated claims processing tools has enabled private motor insurers to improve market positioning, transform underwriting, and significantly reduce the average time to settle a claim. This has resulted in a higher claims settlement ratio, making them trustworthy among consumers.”

An analysis of general insurers’ investments in technology indicates that Go Digit has invested an 80% share of its total technology expenditure on motor insurance, followed by Tata AIG with a 58% share and ICICI Lombard with a 56% share in the FY ending March 2023. This has helped in strengthening the premium growth of these companies, as Go Digit registered 38.2% growth for the FY ending March 2023 as compared to March 2022, followed by Tata AIG with 23.9% and ICICI Lombard with 8.9% growth.

Sahoo adds: “Motor insurers are also leveraging technology to enhance customer experience, which has become a game changer. Digital policy issuance and claim settlement not only ensure a seamless customer experience but also streamline the overall process. Similarly, AI-powered chatbots provide a personalized customer experience, especially in claims management, renewal, and customer grievances, which gives private insurers an edge over public insurers.

“Private insurers are strategically focusing on product lines and enhancing their product offerings, which have also supported their growth. For example, ICICI Lombard has strategically focused on commercial motor insurance, considering the investments in infrastructure and the real estate market.”

Insurers are also focusing on personalization and product enhancements to cater to different customer preferences. The new usage-based insurance models such as pay how you drive (PHYD) and pay as you drive (PAYD) provide a unique and personalized experience. Insurers focus on evolving consumer needs driven by rising electric vehicle (EV) sales and creating products suitable for EVs will further strengthen their position in the market.

Sahoo concludes: “Private insurers will need to grab opportunities presented by new technologies and continue expanding their product offerings to remain competitive. Streamlining claim settlements, enhancing the customer experience and personalization will support private insurers in establishing their dominance in the Indian motor insurance industry over the next five years.”