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ICICI Lombard’s digital push overshadowed by other concerns
March 30, 2023
ICICI Lombard General Insurance Company Limited showcased its continued thrust on digital product innovations and partnerships at its 2023 Analyst Meet held recently. It aims to improve customer experience, reduce fraud risk, find cross-selling opportunities and improve penetration.
Some of these efforts seem to be paying off. For example, its healthcare app IL TakeCare saw nearly 4 million downloads in FY23. Its offers Pay As You Drive and Pay As You Drive are becoming popular in the motor insurance sector.
Management said the technology spend would have a P&L impact of 1.5-2%. While the tech investment may weigh on the company’s profitability in the near term, in the long term, it is likely to prove beneficial by driving premium growth. “We think Lombard’s continued investment and data collection can grow into the underwriting moat. For example, its P&C (property and casualty) risk solutions for corporates (25% mix) have led to increased market share,” JP Morgan analysts said.
ICICI Lombard’s management has guided for a combined ratio of 102% by FY25. A combined ratio above 100% indicates that the company is paying more claims than it is receiving premiums. In the December quarter, ICICI Lombard’s combined ratio stood at 104.4%. According to analysts at Emkay Global Financial Services Ltd, “ICICI Lombard continues to report materially better combined ratios than the overall sector (and even the private sector average).” However, all is not well. “Given the hyper-competitive market both on the pricing front and on the distributor payments front, it is targeting a combined ratio of 102% by FY25 (FY23E: approx. 105%),” say Emkay analysts. This is slightly worse than the pre-pandemic ambition of nearly 100%, he said.
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