It’s no secret that many industries were heavily impacted by the Covid-19 pandemic. The vehicle insurance industry was no different. Before the pandemic, many still bought their vehicles and vehicle insurance from physical showrooms. But when vehicle showrooms were forced to close on account of being a non-essential business, the motor and insurance industries were heavily impacted.
In comparing FY 20-21 and FY 19-20, the IRDAI reported a drop-in growth for both Own Damage and Third-Party Liability policies. The growth for Own Damage premium dipped from 14.01% to 13.11%, and that of Third-Party Liability dipped from 22.46% to 22.1%.
Here are the other ways in which Covid-19 impacted the motor insurance industry.
Dip In Vehicle Sales
The pandemic forced people to stay indoors and only head out only if it was essential. This resulted in a decline in vehicle usage, and no vehicles meant no vehicle insurance.
Furthermore, non-essential businesses were closed, and vehicle showrooms fell under this category. A report by the Federation of Automobile Dealers Association (FADA), claimed that there was a 31% drop in vehicle sales in FY 20-21 when compared to the previous year.
Vehicle Insurance Online
With the pandemic, insurance providers were forced to move their services online. This became a concern as many claim-related processes required a physical presence, such as the damage assessment by a surveyor when a claim is made.
However, the online presence of insurance companies made it easier for customers to do thorough research and apply for the best insurance policy, without an insurance agent coercing them on what they think the customer should buy.
The reduced dependence on the insurance agent as a middleman also helped reduce the impact of commission cost, therefore giving customers lower premiums without compromising on the services offered. Customers can also do the risk assessment themselves now and upload the pictures online to make a claim.
With more Insurance companies had to move their services online on account of the pandemic, erasing the middleman and putting the jobs of insurance agents at risk.
On the other hand, customers became more knowledgeable of their insurance plans – researching the various policies themselves, understanding their needs, and choosing the best insurance policy online.
Now that most insurance companies have moved their services online, it has allowed insurance companies to expand their reach beyond the metropolitan cities and increase awareness of the need for insurance within the semi-urban and rural areas.
With restrictions slowly easing up, people are venturing out of their houses more frequently – traveling, commuting, and life is almost as it was pre-pandemic. This is sure to have a positive effect on the motor and insurance industries, and both can expect an increase in growth in the upcoming years.