THE BIGGEST MOTOR INSURANCE PROBLEM IN INDIA IS NO INSURANCE

The major problem with the third-party motor market in India is that 50% of vehicles remain uninsured, according to KK Mishra, CEO of non-life insurer Tata AIG. "If you take the car segment, most car owners tend to insure their car for two-three years and then it tapers out. In the two-wheelers segment, it’s difficult to get owners to go for insurance even though it is mandatory. So, naturally, when vehicles are not selling, new business does see a hit", Mr Mishra told The Hindu Business Line. He noted that in some of the northern India markets, Tata AIG had pulled out of motor insurance. Referring to the Uttarakhand flood, Mr Mischra said that Tata AIG's loss was in the motor segment, as it did not offer hydro-electric power insurance. For his own company he estimated the loss at INR40m, while for the industry as a whole he estimated a loss of INR30bn to INR50bn ($480m to $802m). Looking ahead, Mr Mishra blamed poor distribution for non-life's lack of penetration, reaching just 0.78% of GDP. "We rely on agents for distribution. Bancassurance has not really worked well, especially with public sector banks, despite their branch network. Distribution is one of the things that we have been talking to the regulator about because general insurance products are small ticket and the margins are very thin".