Have hiked provisions, cut costs on motor 3rd party, says HDFC Ergo

MUMBAI: HDFC Ergo General Insurance has tightened costs in motor third-party cover, fearing claims inflation could sink the line without strict underwriting. It reset reserves in FY25-FY26 after spotting inflation outrunning assumptions.

Speaking to TOI MD & CEO Parthanil Ghosh said claim dynamics had shifted.

"We felt that the third-party rates vis-a-vis the commission that is being paid, is something that doesn't make sense to grow this business everywhere," Ghosh said. "We increased our claims reserve by close to Rs 950 crore for which we got capital from our promoters," he said.

"Number of accidents has come down, but deaths per accident have gone up... Earlier a hit would have resulted in an injury. Now it is converted to death because the impact is much higher," he said.

HDFC Ergo cut commissions in motor TP, especially where claims had inflated payouts. "Our commission rate... is in single digit... where most of the companies will be upwards of 20%," Ghosh said. Motor now formed 19% of business- about half industry weight.

Following the revision, growth has rebounded.
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