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We recently met Sanjeev Mantri (MD and CEO) and the senior management team of ICICI Lombard for an update on the company’s strategy and the overall developments in the General Insurance sector. Key views: 1) Profitable growth remains core to the company’s strategy – ‘Growth and Profitability’ with an equal attention to both. 2) The company is always open to evaluating all the product and distribution opportunities, but the final call is taken based on the strategic fit into its profitable growth and prudent risk management approach. 3) The host of regulatory reforms, including Risk-Based Capital and National Health Claims Exchange, are deep structural reforms and are very positive for the sector’s long-term growth. 4) The combination of low GI penetration, stronger economic growth, and structural reforms should drive over 15% premium growth for the industry over the medium term and ICICIGI should report 1-2ppts higher growth if the market discipline is stable.

ICICI Lombard: Financial Snapshot (Standalone)

It’s always Growth and Profitability; market share does matter

The company will continue to pursue its stated strategy of ‘profitable growth’ and management gives equal attention to the growth and profitability aspects. Market share in its focused business segments of Motor, Health, and Commercial Lines is of key importance, and it would like to maintain or improve its market share as long as it does not have to dilute its brand or ignore the underlying risks. Openness to new ideas remains at the heart of the company’s work culture and it explores all opportunities in terms of product or distribution but accepts the idea only if that fits into the profitable growth strategy and does not go against its prudent risk management and brand-conscious approach.

Regulatory reforms preparing the sector for long-term growth

The general insurance sector is currently witnessing a host of regulatory reforms, including Risk-Based Capital (RBC) Solvency, Expense of Management (EOM) Regulations, Ind-AS, National Health Claims Exchange (NHCX), and Bima Sugam. Some of these reforms and initiatives are visionary steps and are likely to address the sector’s deep-rooted challenges and enable the sector to be ready for long-term growth in a country where the combination of under-insurance and sustained high economic growth offers a long runway for growth. Given multiple tailwinds, the general insurance industry should grow above 15% over the medium to long term, even if there are some turbulences in a few segments. Rising affluence, sustained increases in healthcare cost, and growing risk from natural catastrophes mean that general insurance penetration should continue to rise

Combined ratio guidance unchanged

The company has grown at 16.2% YoY in 8MFY24 vs. 15.4% growth for multiline insurers. Growth in Motor-ex-CV, Health, and Commercial lines continue to be robust and growth in Motor CV shall improve once there is clarity from the Supreme Court on the applicability of six months’ claim intimation window in Motor TP policies. In the health segment, there has been some minor increase in claims frequency; however, with multiple proactive measures, the company has been able to keep its claims inflation lower than that of the industry. The company’s sizeable proactive investments in tech and digital infrastructure have started to deliver results in terms of customer acquisition, pricing, underwriting, claims processing, and turnaround times. Overall, the company reiterates its 102% combined ratio guidance for FY25 and expects premium growth to be 1-2ppts higher than that of the industry if competitive intensity stays stable.

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