Highlights:

In the backdrop of rising COVID-19 cases and uncertainty surrounding the pandemic that remains, various measures taken by policymakers to restart commerce and create are showing results.

The complete halt of activities witnessed in April may be behind and the new normal may well be about learning to live with the virus following, safety protocols, but ensuring a gradual return to normalcy.

The company believes it is important to take extra measures to support customers in these challenging times.

The company has decided to provide some relevant covers to its customers and launched a number of COVID-19 specific health insurance products. It also revamped existing health insurance products by adding customer-centric features.

For new customers purchasing health insurance policy, the company has reduced the waiting period to launch a COVID-19-related claim from 30 days to 15 days.

The company has decided to retain the cumulative bonus accumulated by customers over time, even if they lodge COVID-19-related hospitalization claims.

Most importantly, the company added home health care benefit for customers preferring to avail treatment in the safety and comfort of their homes rather than getting hospitalized.

The company continues to give thrust to adoption of these digital platforms in the quarter under review.

In case of property segments, the company harnessed virtual platforms and technology platforms, including drones for conducting claims service remotely.

For small value marine claims, the company introduced do-it-yourself mode empowering customers to conduct self-assessment of the damage and received real-time claim approval from customer service team.

Industry trends

In the last few weeks, the company has been witnessing signs of green shoots across sectors. As more and more industries are up to digitization and restart operations, business activity should continue to grow. The non-life insurance industry, which witnessed a blip in Q1 of FY2021, should register a growth in the coming quarters.

The general insurance industry registered a degrowth of 4.2% with the industry GDPI moving down to Rs 39329 crore in Q1 of FY2021 from Rs 41072 crore in Q1 of FY2020.

Motor Insurance has been severely impacted during the lockdown, but they're now gaining some results.

Health insurance has benefited from the heightened concern around the health hazard and measures taken by the government. As new health insurance policies registered an upsurge, the company believes that the pandemic may well be a trigger for the segment to witness significant increase in penetration in the near future.

The fire segment continued to show robust growth due to the rate hike with effect from 1 January 2020.

Marine and Engineering lines witnessed degrowth due to the slowdown in the economic activity. However, as the economy is steadily improving, and given the digital adoption by the segment, the company expects to see a rebound.

The new vehicles customers will not be able to avail own damage covers on a long-term basis going forward. This is expected to have marginal impact on business and profitability.

The company is well positioned to navigate through this dynamically changing risk environment given the strength of franchise, diversified product and distribution portfolio and most importantly, the trust of customers.

The company continues to remain focused on creating long-term value for shareholders through prudent risk selection and sustained profitability.

Gross direct premium income of the company fell 5% to Rs 3302 crore in Q1FY2021. Consequent to the increase in minimum prescribed rates for certain occupancies under fire segment, this segment registered a robust GDPI growth of 41.6% in Q1 of FY2021.

On the retail side of the business, SME and agency channel, and health indemnity continued to grow faster and remain areas of focus. To harness the potential of these segments, the company has been expanding distribution network so as to increase penetration in tier 3 and 4 cities.

Individual agents, which include the point-of-sale distribution, were 49,802 end June 2020, as against 47,548 end March 2020.

The long-term motor penetration for private cars stood at 19.8% for Q1 of FY2021 from 17% in Q1 of FY2020. And for 2-wheelers, it stood at 11.3% for Q1 of FY2021 from 17.5% in Q1FY2020.

The advanced premium was Rs 3031 crore end June 2020, from Rs 3025 crore end March 2020.

Combined ratio stood at 99.7% in Q1FY2021 as compared to 100.4% in Q1FY2020.

Combined ratio was 98.4% in this quarter, excluding the impact of Cyclone Amphan and Nisarga, which had an impact of Rs 30 crore as compared to 99.7% in Q1FY2020, excluding the impact of Cyclone Fani, which had an impact of Rs 16 crore.

The investment assets rose to Rs 28118 crore end June 2020 from Rs 26327 crore March 2020. The investment leverage net of borrowings was 4.23x end June 2020 from 4.21x at March 2020.

Investment income declined to Rs 499 crore in Q1FY2021 Rs 527 crore in Q1FY2020. Capital gains declined 56.1% to Rs 60 crore in Q1FY2021 from Rs 138 crore in Q1FY2020.

Solvency ratio was 2.5x end June 30 as against 2.17x end March 2020, which continued to be higher than the minimum regulatory requirement of 1.5x.

The company maintained diversified product portfolio and healthy financials. The company continues to focus on prudent underwriting, technological progress and introducing relevant and timely risk management solution for customers. The company will stay focused on driving long-term growth in a sustainable manner.

The COVID claims are going up, so the company is not taking the full benefit of the reduced frequency in Q1FY2021 and then end up having to have a very high frequency in the last quarter. So the company is keeping a watch and then takes a call on what is the appropriate loss for the year.

The company is looking at unnecessary costs that the company can cut down upon. Meanwhile, the company would make investments in certain areas where it make sense. The company has actually given increment, performance bonus etc to staff in Q1FY2021.

The company can sees an opportunity to invest in the future. The company may even increase headcount going ahead.

On technology, the company has decided to increase technology budget and invest more.