ICICI Lombard General Insurance Company Ltd

NSE:ICICIGI

Earnings Call Transcript 2021-Q1

[Operator]

Good evening, ladies and gentlemen, and a very warm welcome to ICICI Lombard General Insurance Limited's Q1 FY '21 Earnings Conference Call. From the senior management, we have with us today Mr. Bhargav Dasgupta, MD and CEO of the company; Mr. Gopal Balachandran, CFO; Mr. Sanjeev Mantri, Executive Director, Retail; and Mr. Alok Agarwal, Executive Director, Wholesale. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Bhargav Dasgupta, MD and CEO, ICICI Lombard General Insurance Limited. Thank you, and over to you, sir.

[Bhargav Dasgupta, MD, CEO & Director]

Thank you, and good evening, everyone, and thank you for joining the earnings conference call of ICICI Lombard for Q1 FY 2021. I would like to give you a brief overview of the recent developments in the industry and our responses to them, post which our CFO, Mr. Gopal Balachandran, will share the financial performance in the company. Now as you -- we know this, I mean, as we speak today, we are seeing rising cases of COVID-19 in the country. While that's happening, and there is a level of uncertainty surrounding the pandemic that remains, various measures taken by policymakers to restart commerce and create are showing results. As such, we believe that the complete halt of activities that we witnessed in April may be behind us, and the new normal may well be about learning to live with the virus following, safety protocols, but ensuring a gradual return to normalcy. At ICICI Lombard, we believe that it is important to take extra measures to support our customers in these challenging times. Forcing the difficulties arising due to the pandemic, we decided to provide some relevant covers to our customers. Accordingly, we have launched a number of COVID-19 specific health insurance products. We have also revamped our existing health insurance products by adding customer-centric features. For new customers purchasing health insurance policy, we reduced the waiting period to launch a COVID-19-related claim from 30 days to 15 days. This is the initial wait period that we have. Considering the economic uncertainty, financial security has gained utmost significance for our customers. So we decided to retain the cumulative bonus accumulated by our customers over time, even if they lodge COVID-19-related hospitalization claims. In the normal circumstances, this would not be so. Most importantly, we added home health care benefit for our customers preferring to avail treatment in the safety and comfort of their homes rather than getting hospitalized. To highlight these upgraded health insurance solutions, we have launched a new health insurance focused campaign, Restart Right. I hope all of you have seen the campaign. During our earnings call for FY 2020, we had shared with you a host of digital initiatives that we took to service our customers and enable our channel partners to conduct business. We continue to give thrust to adoption of these digital platforms in the quarter under review. Our new mobile service app, IL Take Care, that was extended to the retail customer segment, crossed 130,000 downloads, enabling more and more customers to avail its insurance and wellness solutions at their fingertips. The teleconsult feature available through this app enabled customers to seek medical advice from the safe environment of their home. In case of property segments, we harnessed virtual platforms and technology platforms, including drones for conducting claims service remotely. For small value marine claims, we introduced do-it-yourself mode empowering our customers to conduct self-assessment of the damage and received real-time claim approval from our customer service team. For the diversity of stakeholders, including customers, investors, et cetera, I would like to appraise you that we have begun integrating EAC principles across our businesses. Towards this, we have implemented policies and initiatives aimed at scaling up our efforts towards sustainable value creation. Let me now talk about the industry trends. In the last few weeks, we have 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 the first quarter, Q1 of 2021, should register a growth in the coming quarters, we believe. For the recently concluded quarter, the general insurance industry registered a degrowth of 4.2% in Q1 of 2021 over Q1 2020, with the industry GDP and moving down to INR 393.29 billion in Q1 2021 from INR 410.72 billion in Q1 of FY 2020. This is as per GI council report. Excluding the Crop segment, the GI -- the General Insurance industry degrew at 3.2% to INR 378.54 billion in Q1 2021 as compared to INR 391.08 billion in Q1 of FY 2020. Now within this, the segments such as Motor Insurance has been severely impacted during the lockdown and -- but they're now gaining some results. The month of June, for the segment has witnessed signs of recovery, though we are still far from the long-term average. On the other hand, 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, we believe that the pandemic may well be a trigger for the segment to witness significant increase in penetration in the near future. And as far as the commercial lines are concerned, the fire segment continued to show robust growth due to the rate hike with effect from January 1, 2020. We've talked about this in the past. 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, we expect to see a rebound. Since our FY 2020 results call, we've witnessed new regulatory announcements that are focused on policyholder benefits. These include: first, the launch of standardized health insurance policy called Arogya Sanjeevani with effect from April 1, 2020, wherein the authority has allowed insurers to determine the price on compliance with specific norms. Initially under the policy, the sum insured allowed was between INR 1 lakh to INR 5 lakhs. Further, the authority wide circular dated July 7 allowed by insurers to issue policies with sum insured less than INR 1 lakh and greater than INR 5 lakhs which -- and this has to be in multiples of INR 50,000. The second has been the withdrawal of the option of long-term package, effective August 1, 2020. This means that new vehicle 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. Allowing general and health insurers to -- this is the third one, allowing general and health insurers to offer both indemnity and benefit-based short-term health insurance policies for COVID-19. It also prescribed a standard benefit base health policy and a retail standard health policy under the nomenclature COVID Rakshak policy for benefit and Corona Kavach policy for indemnity, respectively. While the Corona Kavach policy was mandated to be offered on or before July 10, 2020, insurers were encouraged to offer the Corona Rakshak policy by July 10, 2020. Now as I conclude my address, I would like to summarize that we are well positioned to navigate through this dynamically changing risk environment given the strength of our franchise, diversified product and distribution portfolio and most importantly, the trust of our customers. We continue to remain focused on creating long-term value for our shareholders through prudent risk selection and sustained profitability. I'll now request Gopal to take you through the financial numbers for the recently concluded quarter.

[Gopal Balachandran, CFO & Chief Risk Officer]

Thanks, Bhargav, and good evening, everyone. Hope everyone is staying safe and healthy. I will now give you a brief overview on the financial performance of the company for the quarter ended June 30, 2020. We have put up the results presentation on our website. You can access it as we walk you through the performance numbers. Gross direct premium income of the company stood at INR 33.02 billion in quarter 1 as compared to INR 34.87 billion in quarter 1 of the last year, a degrowth of 5.3%. Excluding Crop segment, our GDPI decreased to INR 32.74 billion in this quarter as compared to INR 34.88 billion in quarter 1 of last year, registering a degrowth of 6.2%. Our GDPI growth was primarily driven by our focus on preferred segments. 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 quarter 1 2021, thereby aiding the GDPI growth of our Property & Casualty segment. As indicated in our results presentation, the overall Property & Casualty segment grew by 20.5% in quarter 1 2021 over quarter 1 2020. On the retail side of the business, SME and agency channel, and health indemnity continued to grow faster and remain our areas of focus. To harness the potential of these segments, we have been expanding our distribution network so as to increase penetration in Tire 3 and Tire 4 cities. Our individual agents, which include the point-of-sale distribution, were 49,802 as at June 30, 2020, as against 47,548 as on March 31, 2020. The long-term motor penetration for private cars stood at 19.8% for quarter 1 2021 from 17% in quarter 1 of 2020. And for 2-wheelers, it stood at 11.3% for quarter 1 2021 from 17.5% in quarter 1 2020. The advanced premium was INR 30.31 billion as at June 30, 2020, from INR 30.25 billion as at March 31, 2020. Combined ratio stood at 99.7% in this quarter as compared to 100.4% in quarter 1 of last year. Combined ratio was 98.4% in this quarter, excluding the impact of Cyclone Amphan and Nisarga, which had an impact of INR 0.31 billion as compared to 99.7% in quarter 1 of last year, excluding the impact of Cyclone Fani, which had an impact of INR 0.16 billion. Our investment assets rose to INR 281.18 billion at June 30, 2020, as compared to INR 263.27 billion at March 31, 2020. Our investment leverage net of borrowings was 4.23x at June 30, 2020, as compared to 4.21x at March 31, 2020. Investment income decreased to INR 4.99 billion in quarter 1 this year compared to INR 5.27 billion in quarter 1 of last year, mainly on account of lower capital gains. Our capital gains was lowered by 56.1% at INR 0.6 billion in quarter 1 this year compared to INR 1.38 billion in quarter 1 of last year. Our profit before tax grew by 11.7% to INR 5.31 billion in this quarter compared to INR 4.75 billion in quarter 1 of last year on account of lower capital gains. Consequently, profit after tax grew by 28.5% to INR 3.98 billion in quarter 1 this year as against INR 3.10 billion in quarter 1 of last year, primarily due to the lower effective tax rate of 25%. Return on average equity was 25.1% for this quarter as compared to 23% for quarter 1 of last year. Solvency ratio was 2.5x at June 30 as against 2.17x at March 31, 2020, continued to be higher than the minimum regulatory requirement of 1.5x. As I conclude my address, I would like to reiterate that we ended quarter 1 2021 with a diversified product portfolio and healthy financials. We continue to focus on prudent underwriting, technological progress and introducing relevant and timely risk management solution for our customers. We will stay focused on driving long-term growth in a sustainable manner. I would like to thank you all for attending this earnings conference call, and we will be happy to take any specific questions that you may have. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Suresh Ganapathy from Macquarie.

[Suresh Ganapathy, Head of Financial Research]

BDji, I'm seeing after a long time that you have had an underwriting profit. Now if I were to look -- I have a closer look, there has been a good claims as well as expense management. I mean how long do you think -- I mean how much of this is sustainable? Has it got to do with the fact that the lockdowns have been there and therefore, the claims have been lower or work from home has resulted in lower expenses, just something more qualitative that you can share on the overall claims as well as expense management? The second question is the retail indemnity, of course, has done very well. Again, any anecdotal evidence or qualitative feedback from corporates? Are they really going for more of these group policies or people are taking more retail indemnity-based products, that's something which we would like to know. And finally, the motor OD and third-party losses have actually gone down quite substantially, the loss ratios, whereas fire, marine and engineering has picked up. Is it just a seasonal thing or maybe something got to do with some event which has occurred this particular quarter?

[Bhargav Dasgupta, MD, CEO & Director]

So let me address the third one first. It's a short response, so let me get it done with. This quarter, we had the cyclone losses that Gopal talked about and 1 or 2 marine losses, noncyclone-related. That's why -- and as you know, these businesses are episodic. It could be, that in a certain quarter, you will have a loss, so it will go up. But on an average for the year is what we look at these numbers. So as I said there will be quarterly volatility doesn't really, really concern us in that sense. We would look at what is the picture over there -- over the whole year. And Cyclone Amphan particularly had some impact. In terms of the underwriting number and the sustainability thereof, look, there has been obviously some benefit on the claims side this quarter in terms of frequencies coming down. And if you look at different segments, this is in line with what we had talked about in May when we were doing the last quarter's earnings or last year's earnings call, we had said that we would expect and we were seeing some reduction in frequency in the motor side. We had also talked about the frequency reduction in the health side when it came to the planned surgery cases. Now as you understand, at this point in time, unless you really need to go to a hospital, no one is going -- would want to go to a hospital. So these are benefits that has come through. And we -- as I also said that we will see some of these going up in -- as things stabilize and it normalizes. The way we have looked at this is these are not something that -- so for example, health. In health, we -- while there has been a benefit in the quarter, our approach to reserving and actual practice is a bit conservative. We do worry about COVID claims going up, and it is going up as we speak. So we wouldn't want to take the full benefit of the reduced frequency in the first quarter and then end up having to have a very high frequency in the last quarter. So we would want to watch this for a whole year period and then take a call on what is the appropriate loss for the year. So there is some benefit, but it's not entirely kind of factored in the first quarter numbers. In terms of cost, look, obviously, like every company, we are looking at all, in a sense, unnecessary costs that we can cut down upon. These are some obvious areas which everyone would be doing. But certain areas where we believe it makes sense to invest, we are actually investing. So one, as a company, we've actually given increment to our people. We had given performance bonus in the first quarter. Today, in the Board meeting, we've decided on the increments for people. And we are seeing opportunity in this -- at this point in time for the long-term because we believe, we can see this as an opportunity to invest in the future. So there would be possibility that we may even increase our headcount going ahead. So it's not -- the savings on the fixed cost is not on the employee side, and the employees cost is our biggest cost element. So savings will be in terms of other areas of cost that we can contain. And do remember that for us, the sourcing cost is a large part of the cost. So if we have lower retail numbers in a period, the sourcing cost is also low for that quarter. And lastly, on technology, we are actually -- we've decided to increase our technology budget and invest more. And we see in the long term the experience that we've had in this period, in the long term, we believe we will take some positives out of this in terms of the way we work, the way we operate, how much we work from home, how much flexibility we provide, how much of further investment in digitization we are at a certain level related to the market, but still, we believe, this is the time to keep investing and stay ahead of the curve. And that's an area where we are further seeing how we can invest. Lastly, your second question in terms of indemnity, yes, you're right. I mean there is, as I said in the covering -- opening remarks also, I made the point that there is a higher demand for indemnity, both from the corporate and even more from the retail side. One thing you'll remember is that our retail health book. And if you see our overall health book, there is a corporate segment, there is a B2B2C segment, which is business that we source through our bancassurance partners. It is fundamentally retail, but it gets classified under group because it's B2B2C and third is a pure B2C, which is retail indemnity that we sell largely through agents, et cetera. The retail indemnity business has done really well, but the B2B2C, obviously, because banks are not disbursing as much as they were in the past that has degrown. So on balance, we are quite happy with the health opportunity and the growth that we are seeing at this point in time. And we believe it is potentially a step change in terms of demand for health insurance in the long term. And one of the things that we are seeing is not just new customers, we're also seeing existing customers ask for sum insured in Q.

[Suresh Ganapathy, Head of Financial Research]

And there's a good demand for the standardized health product, right? The Arogya Sanjeevani and all?

[Bhargav Dasgupta, MD, CEO & Director]

Yes. It's just -- recently launched. We think it will have a decent demand in certain markets -- in the segments of the market. I think it's a good product that the regulator has launched. It will probably increase penetration in segments which otherwise were not buying health insurance.

[Operator]

The next question is from the line of Shreya Shivani from CLSA.

[Shreya Shivani, Research Analyst]

Sir, I was going through the slide which talks about the impact of catastrophic events. And we know that in -- for general insurers, there is a catastrophic trigger that after a certain level you'll actually have that catastrophic bonds which will get triggered. So can you throw some light on -- since we had certain cyclones and floods this quarter and also with COVID-19 going on, if you can really talk about how are we managing the losses in the catastrophes that going around? And how close or far are we from that trigger -- which will trigger the bonds, the catastrophic bonds.

[Bhargav Dasgupta, MD, CEO & Director]

So Shreya, these are not catastrophic bonds. These are cat reinsurance that we buy, every company buys. And it triggers not in a sense that you have to accumulate losses for the year and then it triggers. It is an event-based trigger. So even when a cyclone happens, if the aggregate losses cross that threshold that we buy the cover from, then the reinsurers pay. And we have to -- then we have to spend a little bit of money which is pre-agreed to reinstate that cover. So basically, what it does is very high -- very large cat losses. Our balance sheet is protected, and we pay a fee to buy that production. It's almost like you're buying motor insurance for your motor car. It's like our book that we are protecting through a reinsurance coverage. It's not a cat bond. And in terms of specifics of what has happened. So even this year, when the Amphan happens, aggregate claims may be X. In fact, that's slightly gone above our trigger threshold. So it will trigger, and we will get some return from the reinsurer. But our balance sheet is -- and all of that is actually factored into the quarterly numbers that you see. Gopal, you want to add anything?

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes. I think the only thing that I will just add is, so I think, in line with what we have communicated, I think the trigger point for a catastrophic loss in terms of what's the hit that we take on the P&L, that number is at about INR 25 crores. And of course, so that's the maximum hit that we take in the event of any catastrophic event that arises. And over and above that, as Bhargav explained, I think, obviously, depending on the extent of recovery that we make on the reinsurance program, we will obviously have to pay the [indiscernible] cost. So, so far, as the current couple of catastrophic events are concerned and so far the Cyclone Amphan is concerned, I think the extent of losses that came and hit on the net is in excess of the INR 25 crores threshold. So that -- so to that extent, our claims is impacted by INR 25 crores, and the excess will be paid by the reinsurers. And insofar as Cyclone Nisarga is concerned, I think that has not had a large impact, insofar as our claim numbers are concerned. In the aggregate, as we mentioned, as a part of the opening remarks, both of these events put together on the claims, we have had an impact of about INR 31 crores.

[Operator]

The next question is from the line of Ajox Frederick from B&K Securities.

[Ajox Frederick H., Research Analyst]

Sir, my question is regarding health, and what strategies are we adopting to utilize this big opportunity that's out there? That's one. And two is, the comparative slowdown, is it because of banks slowing down? And what portion of our business is coming through banks, particularly the indemnity, retail indemnity. So that's on health, sir.

[Bhargav Dasgupta, MD, CEO & Director]

Yes. So again, and I'll ask Sanjeev to expand on this. The answer to the second part is yes. As I said, because we have a larger part of our health distribution, and these are not necessarily indemnity, this includes retail benefit products. And since we traditionally have a larger footprint from the bancassurance partnership side on the retail health, the impact on health for us has been pretty severe on that end. Just to give you a sense, last year we had roughly about 68% of our retail business. And then this retail includes pure retail as also the B2B2C that I talked about. 68% of the business was a business that we got from the -- these kind of partnerships and 32% was pure direct one-to-one sales. That number from the industry will be very different. It will be probably very high for one-on-one sales and very low for the additions. So that definitely has had some impact for us this quarter. But within that, the agency piece, which is individual sales, that's done really well for us. And while it's not cover-up the gap on the bancassurance side, but it's relatively outperformed is our view of what's happened in the market. In terms of the strategy, look, there are multiple levers of strategy. One, of course, is the whole focus on product and distribution, and you've seen a whole host of products that we've launched recently. One of the things that we've been doing for the last 2 years is significantly expanding on our agency distribution. As I said, bancassurance, we're already strong. And there's been some regulatory changes in the -- about 3, 4 years back, which has also triggered this initiative from our side. There are certain constraints that have gone away for us, and that's something that we are driving. The other thing that we're also doing is the entire approach that we are taking to health is to say that we are not just focusing on pure sickness insurance where you go to a hospital and we pay the -- reimburse the claim. We are thinking through with a very customer-centric point of view, in terms of what all do you really worry about as an individual and can we find solutions to each one of them? So one of them being, why just hospitalization? Why can't we cover outpatient care? And for group customers and B2B2C customers, we've launched OPD covers last year. That's -- that was doing quite well. I mean the bancassurance piece has gone a bit slower this quarter. But -- so that's one, for example. And there, we've worked with network of partners, digital health players, telecalling -- telehealth companies, wellness service companies. And all of this is being provided on a digital platform. It's an app which we call, IL Take Care. I talked about that in my opening remarks. And in this period, one of the things that we did want to drive was this, in the long term also we wanted to drive this digital health. But in this period, that was obviously something that we kind of scaled up, included home health care because for small issues at this point in time, no one wants to go to a hospital. But that doesn't mean our customers should suffer. So we've actually tied up service with service providers to provide home care for our customers for COVID or non-COVID cases both. So these are very, very first-to-the-market kind of initiatives that we've already launched. And we believe the long term that we have to look at the complete health care service for a customer rather than just IPD which, as of now, mostly or -- most of the market just focuses on. Sanjeev, you want to add anything?

[Sanjeev Radheyshyam Mantri]

No, I think it's pretty much well covered. And one of the key things that we have also seen is the customers on the retail side, in particular, in the indemnity part, have started looking at having health policy both from an investment standpoint rather than an expense mentality. So one of the few things which is changing and helping us on ground also to drive an indemnity front. Benefit, I think, as Bhargav also mentioned, will build up as and when disbursements come in because benefit traditionally it's more of an asset production based cover, which will happen as we see our banking partners and our NBFCs progressively start disbursing more, each one of them is, I think till at least last month getting their credit strategy in place, and we would probably see a relatively better quarter 2 than what's happened in quarter 1 on that.

[Ajox Frederick H., Research Analyst]

Perfect, sir. And just a point on the loss ratios of health. So compared to Q4, we saw it slightly deteriorating. So like 72%, 75%. So how should that impact, sir?

[Bhargav Dasgupta, MD, CEO & Director]

Gopal, you want to explain that?

[Gopal Balachandran, CFO & Chief Risk Officer]

So Ajox, what happens is, I think loss ratio is purely a function of what mix of business that you write. And as we have kind of explained, in terms of corporate, generally tends to have a relatively higher loss ratios as compared to, let's say, the extent of loss ratios that you will get to see on the retail indemnity portion. So that's one. The second element is with respect to, when you look at health, health also includes the retail benefit component. And in this quarter, as you would have seen the extent of loss ratios that you would have -- or the benefit portfolio contribution is relatively far lower. And generally, benefit is a profitable book. On the aggregate, when you look at the overall loss ratios, for health, quarter 4 was roughly at about 84.8%. I mean, quarter 1 of this year is at 85.7%. So in that sense, it's not a material movement in terms of the overall numbers. It's purely a function of what mix of business that you write. Quarter 1 generally tends to be far more heavy in terms of corporate because bulk of the corporates tend to renew their policies. And Q4 generally tends to be more relatively skewed in terms of retail where the general loss experience of the retail indemnity book is lower. So it's purely a function of the mix of both.

[Bhargav Dasgupta, MD, CEO & Director]

And just to add one more point while you shouldn't look at just the loss ratio because the expenses are different across these 2 categories. The B2B, the corporate business, pure corporate business, employers, where we cover employees, the distribution cost is relatively less. Pure retail, the distribution cost is higher. So when we look at the business, we look at, in aggregate, the combined ratio.

[Ajox Frederick H., Research Analyst]

Got it, sir. Sir, and this new products like Arogya Sanjeevani and all these COVID-related products. So what is your sense like going forward? Okay, let's forget COVID. But with Arogya Sanjeevani, do you think like that portion will grow substantially? And do you think that, that makes more money for you or your pure play products are making more money, structurally speaking going forward.

[Bhargav Dasgupta, MD, CEO & Director]

What we've done is we've kind of segmented the market, we believe that there is a segment of market which today was not buying the traditional covers or typical Mediclaim policies that we sell-through our retail agency force because of expense -- maybe it was expensive, maybe each one of us have our own terms and conditions so maybe it was getting too complex for the retail customer. So the whole thought process behind this from the regulator was to have a very standardized product. So there is no dissonance or gradually at least. The hope is that there won't be any dissonance in terms of understanding of what you've bought. So if you got a standard Arogya Sanjeevani product from insurer A versus insurer B, there is no difference. So it will -- and we strongly support this thought process because we believe that in the long term in a very underpinned market like India, it is important to build credibility on the product.And in a product like insurance, if you have too much variation, while it is fine for maybe slightly more sophisticated customers. For new to the category customers, it's good to have a basic product that they understand easily. So it will, we believe, open up a market for that segment of customers. Also geographically and in terms of income profile, there could be a -- because these are slightly restricted covers, it's not as full-blown as some of the other covers that we have. So it's slightly cheaper. So we expect a certain segment of customers wanting to buy this. Now profitability will depend on whether we've done the segmentation right and whether we are actually bringing new customers to the book rather than cannibalizing our existing customers. That's something that we have to watch very, very closely. But we believe in the long term, this is a very positive development. It will depend on the execution in terms of whether we actually get the benefit.

[Operator]

[Operator Instructions] We take the next question from the line of Anshu Dayani from Edelweiss. There seems to be no response from the line of Anshu Dayani. We move to the next question. The next question is from the line of Madhukar Ladha from HDFC Securities.

[Madhukar Ladha, Research Analyst]

Sir, can you give us some color on how renewals in motor have behaved during the lockdown? Are we seeing similar levels in TP and in OD separately? And are we seeing lapses happen? Some thought process, some color over there will be helpful.

[Bhargav Dasgupta, MD, CEO & Director]

Yes. I think we talked about the fact that in April, the renewals were slightly down given the leeway that was given to -- by the regulator to renew if customers wanted with a lag, that was not surprising, and also given what was happening on the ground. What we had anticipated was that people will come back and renew a bit later. So the renewal rates for T plus 1, as in what when I say T is what people who renew within the same month versus people who renew in the next month or renew in the next month after that, those percentages have gone up. So in a sense, we've kind of been recovering the reduction in renewal rates that we saw in the April. And this is increasing every month. Sanjeev, you want to give any more color to that?

[Sanjeev Radheyshyam Mantri]

No, no, absolutely right. So vis-a-vis what happened in April, the gap for delta was almost 12% to 15%. If we talk about June exit, it's pretty much close to what we had pre-COVID level in terms of renewals. Still marginally less, but nothing much to worry about. And we do believe that we will have a decent renewal because a lot more mobility has also started across the country and consequent to that people who actually deferred it in the month of April and May should come back and seek renewal. So we are pretty much sorted on that. And there was a dispensation from the regulator till May 15 and thereabouts. And after that, these customers also renewing it. So we don't see any challenge on private car and TP any which way for the new stock that was sold last year has a long-term duration. So any which way the customer has been having along the policy on that.

[Operator]

The next question is from the line of Prateek Poddar from Nippon India Mutual Fund.

[Prateek Poddar, Research Analyst]

You have written a crop this year. I mean it's very small. I understand 1%. But maybe just the thought process, are you seeing in the markets that the rates have, I mean, hardened and that is why…

[Bhargav Dasgupta, MD, CEO & Director]

It's just an old policy because the data comes in with a lag from the government at times. So it's an old policy. We've not written anything new.

[Prateek Poddar, Research Analyst]

Okay. And sir, secondly, on health insurance, you talked about that COVID could be an inflection point for selling of health products. But if I look at the mix, the mix is still -- it's skewed towards B2B rather than B2B/B2B2C. So maybe some thought process as to why is that so that in quarter 1 because I would have assumed quarter 1 the fare would have been the highest and hence the pull demand should have been the highest. But a bit surprised and I saw that the individual numbers are flat on a Y-o-Y basis when it comes to the mix.

[Bhargav Dasgupta, MD, CEO & Director]

Sanjeev, you want to talk about that?

[Sanjeev Radheyshyam Mantri]

Yes. I'll take that. So with respect to quarter 1 being highest, I think sequentially, the demand is picking up when the lockdown came in which was at a very sharp level. At that point of time, I think even the consumers, they're kind of discovering themselves. So from that perspective, now the demand is picking up. Even if you look at it internationally, China, most of the growth in indemnity health-based products has happened post the COVID crisis getting over. So we do believe that we are also having a similar pattern when it comes to demand for this product coming up.

[Bhargav Dasgupta, MD, CEO & Director]

In fact, just to add to what Sanjeev was saying, April was slow because, as you explained, everyone was probably thinking of other issues. June, retail health numbers have been very, very robust for us, and we believe for the industry as well.

[Prateek Poddar, Research Analyst]

So the exit would have been higher than what it would be for the quarter average, right? Is that a fair understanding, sir?

[Bhargav Dasgupta, MD, CEO & Director]

Yes.

[Sanjeev Radheyshyam Mantri]

Absolutely. And on the -- just to give a small indication, even the quarter 4 which typically has the highest level of agency partners being active, we have seen what's happened in the month of June in particular. We have seen numbers higher than March month or June -- Jan, Feb, March month agency activation numbers also. So we're seeing a very, very robust growth. And these slow measures will Bhargav explain in terms of what we have done has also helped in market where we are approaching ICICI Lombard products.

[Gopal Balachandran, CFO & Chief Risk Officer]

Just to add on to that, Prateek, I think if you look at the June exit, while you would have seen the quarter 1 new indemnity growth rate at 26%, if you look at the exit for the month of June, the new indemnity growth has actually been about 77%.

[Prateek Poddar, Research Analyst]

Wow. Okay. And sir, lastly, just within this employer-employee, is it -- I mean because there was one regulation in between bearing every company had to take this COVID policy or had to cover its employees for the COVID-related disease. So is it because of that, you're seeing the spike? And within this, what's the mix between large corporate, mid and small, if mid or SMEs, if you can give that, that would be radiating.

[Bhargav Dasgupta, MD, CEO & Director]

So that was MHA, but that has not been -- it's not getting followed through. So we don't think that may have had some initial spike, but now that's not the factor. In terms of mix, Gopal, you want to answer?

[Gopal Balachandran, CFO & Chief Risk Officer]

So I think largely, I think, Prateek, what we have always said is we have tried to keep the portfolio as granular as what we can. Our approach pretty much remains the same on the B2B part of the business. We have -- so in that sense, in terms of the overall mix, the portfolio of large corporates will tend to be much lower than the SME portfolio that we have -- that we write. So for example, if you would have seen the SME segment continues to kind of grow robust, on an aggregate basis, not specific to health, if you would have looked at, that has grown at about 30%. But the portfolio mix is more skewed towards relatively small and mid-corporate accounts as compared to large corporate accounts that we would have written.

[Operator]

The next question is from the line of Sanketh Godha from Spark Capital.

[Sanketh Godha, Vice President]

Sir, just again, hopping on the health point. So if I look at absolute numbers, retail indemnity or individual health care business classified in your presentation, that has seen a decline, but we say that the new indemnity has grown by 26%. Sir, I just wanted to understand how do I add up the numbers because the group others where, I believe, B2B2C sits, that contribution has also come off. So really trying to tie the numbers, why the retail health numbers, those are new indemnity has grown up, but the absolute number is definitely still growing for us. So that is first question. And second question is largely with respect to the motor TP loss ratio, which is at around 70 percentage right now. Do you think this loss ratio is sustainable because 70 looks to be too good. And despite our 2-wheeler contribution in coming off a bit in the first quarter compared to what it was for the full year of last year and the last quarter of the same year. So even if the mix is moving in favor of other products, i.e. the severity or intensity are higher, the loss ratio in motor TP has improved. So just wanted to understand that point.

[Bhargav Dasgupta, MD, CEO & Director]

So I'll ask Gopal to answer the first question on the health. On the motor TP side, as we've discussed many times, what we should look at is the number for the whole year rather than just a quarter number. We may have had some benefits in terms of a quarter, some releases here or the fact that frequency was lower in this quarter. So you should watch the number for the whole year. Having said that, overall, the trend in the TP side is pretty positive. We are seeing frequency drops sustaining. In terms of mix that you said, the mix is not deteriorated, similar. In fact, our CV book mix has come to about 14%, 15%, 2-wheeler is about 27% still. Actually, private car has increased in the mix. But we do, as we've said since last quarter, we are actually gradually increasing our CV exposure a bit, again cautiously because we are seeing some opportunities given underlying changes in behavior. So on TP, we are feeling reasonably comfortable. There may be some volatility in loss ratios in a particular quarter vis-à-vis another quarter. But on balance, I think we are reasonably happy with the TP book that we write. The industry situation, we can't comment. On the health, Gopal, you want to explain the numbers? The issue is the same that I said, right, B2B2C, which is through this bancassurance has come down, which has not been -- we've not been able to compensate that with the retail indemnity growth that we sell-through agents in spite of the numbers that Gopal talked about. But Gopal, do you want to give more color to…

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes, sure. Sure. So Sanket, if you look at the total retail book in terms of health, for quarter 1 last year, that number was roughly about INR 3.4 billion. This includes both benefit as well as indemnity put together. This quarter, that number is down to about INR 2.2 billion. Now obviously, a large part of this decline is contributed by the number that Bhargav spoke about in terms of the benefit portfolio not clearly having a significant decline. And so far as the Indemnity segment is concerned, within retail, that number has actually increased from INR 1.5 billion, INR 1.47 billion to INR 1.82 billion. So that's actually an increase of 23%. This is the aggregate retail health indemnity. Within that is what we mentioned about the new retail indemnity growth was 25% for quarter 1. And for the exit month of June, new retail health indemnity was 77%.

[Sanketh Godha, Vice President]

Okay. But Gopal, just to clarify, when I do the numbers then you have given in the presentation, 19.5 percentage as individual, and 20.1% as -- in the current year. The number comes to the individual health at INR 1.7 billion and INR 1.6 billion for last year and the current year, respectively. So I see a decline around of 9 percentage. So still I'm not able to figure it out that INR 1.5 billion and INR 1.8 billion, what you're trying to say. The doesn't get reflected in the numbers which you have disclosed in the presentation.

[Gopal Balachandran, CFO & Chief Risk Officer]

So when you look at the presentation, Sanketh, what happens is, obviously, there is some element of indemnity that goes and sits at a part of retail, which is the number that you would look at. And equally, there is some element of indemnity business that will sit as a part of group others. So when you look at -- which is where I kind of gave the breakup for you. In terms of aggregate indemnity book, that number has increased from, as I said, INR 1.5 billion to about INR 1.82 billion.

[Operator]

[Operator Instructions] The next question is from the line of Nishant Chandra from Temasek.

[Nishant Chandra, Associate Director, India]

Yes. I had 2 points. So one is with respect to the claims fee especially on motor, what has been our relief policy from prior period, especially on TP between March 31 and June 30. Has there been a revision in terms of assessment of actuarial base that we have there? The second one is on the share value account fees. If I remember correctly, for the quarter ending March, I think we have taken some sort of an impairment with respect to equity book. What has been the stance given recovery in market in quarter ending June, as in you reversed or -- because I couldn't see that clearly from the financials. I could see a change in fair value accounts, but I couldn't see whether it was done to a reversal of impairment or is it through the fair value changes?

[Bhargav Dasgupta, MD, CEO & Director]

So this reversal of impairment? No, we've not done any. Yes, we had done an impairment because of the sharp correction in the month of March. Things have recovered, but we've not done a reversal of impairment. We normally don't do that. I mean we believe that's slightly aggressive in approach. So we don't do that. If whenever we sell the particular stock, we will -- while we could -- I mean, theoretically, yes, we could, but we generally don't do that, number one. And in the -- in terms of the provisioning -- sorry, the reserving policy, there's no change in the policy. Nishant, it's the same thing which basically every quarter -- in fact, as I've been sharing every month, our actuarial underwriting finance sales, all of us sit together and look at the book, which are the books, which we believe makes sense to focus on, et cetera. But on the reserving side, we actually looks at numbers on a quarterly basis. And basis sales assessment, if we believe that there is somewhere we need to strengthen something, somewhere the data is compelling that we have to release, we do the release. So it could be there in a certain quarter. It's not as if everything happens at the end of the year. It could be that in certain quarter, certain line we could therefore see.

[Nishant Chandra, Associate Director, India]

Because if there has be a release in motor TP, given that it is a quarterly number that we are seeing now and it could potentially be read over the full year, the 70% is not clearly an extendable thing. So the steady state is somewhere far higher of 70%, but there has been a release which is pulling that down to 70%, is how I interpreted it.

[Bhargav Dasgupta, MD, CEO & Director]

So as I explained earlier, the releases -- need not be spread over the whole year. Equally, in terms of the frequency drops that we've seen, we've also not been overaggressive in booking all of those for the reasons that I articulate because you want to watch the claims pattern over the year and then take a call for the year.

[Nishant Chandra, Associate Director, India]

And just looking at the table in the appendix of the presentation, it seems like the revisiting is come from previous -- prior to FY '20 because FY '20 there is like…

[Bhargav Dasgupta, MD, CEO & Director]

I couldn't hear the question. Gopal, if you heard it, if you can respond.

[Gopal Balachandran, CFO & Chief Risk Officer]

Nishant, can you just repeat that again?

[Nishant Chandra, Associate Director, India]

No. So if I look at the table in the appendix of the presentation, my understanding is that the releases all pertain to FY '19 and before and not for FY '20. So I'm just -- just wanted to understand, if my understanding is correct.

[Gopal Balachandran, CFO & Chief Risk Officer]

So what happens, Nishant insofar as loss experiences are concerned, I think it's purely a function of the loss development that we get to see across portfolios. As we have explained earlier, in respect of short-tail lines, the releases tends to be much faster. And in respect of some of the long tail lines, obviously, we wait for certain periods of development before which we can take a call on the reserving numbers. So what you get to see is purely a function of most of the short-tail lines that we would have written. And then, of course, if basis development, even in the long tail lines, if we get to see a need for reserving to be relatively lower, then to that extent one would calibrate the reserves accordingly.

[Bhargav Dasgupta, MD, CEO & Director]

But the FY '20 is too near for that to happen.

[Operator]

The next question is from Rishi Jhunjhunwala from IIFL.

[Rishi Jhunjhunwala, Research Analyst]

Sir, just following up on the previous question and maybe specifically on motor OD, right? Because of the country has been lockdown for almost 2 months and partial lockdowns for the rest of the June as well. Just wanted to understand, I mean, clearly, the number of claims that would have come on motor OD would be substantially lower. But what we see in terms of claim ratios, the improvement is not that stark. So are we like provisioning for claims not reported or any of that sort in terms of smoothing of how the claim ratios play out for the rest of the year? Because I'm assuming it's unlike TP, it's a 12-month thing. And if claims haven't come in 3 months, then at least for that quarter, the number should have been much better?

[Bhargav Dasgupta, MD, CEO & Director]

So Rishi, it's the same philosophy. As I said in one of the questions, one could take the full benefit in a quarter, but we don't believe that's prudent because we also talked about it in May and as I repeat the point that we believe that people will use vehicles a bit more when they have to rather than using public transport. So you don't want to have a situation where you take the full benefit in the quarter and then towards the latter half of the year your frequency goes up sharply and your -- you see a huge swing. So we would -- I think it's appropriate to watch the number for the year rather than take full benefit in the quarter.

[Rishi Jhunjhunwala, Research Analyst]

So you've provided for more in this quarter. That was prior to the say committed.

[Bhargav Dasgupta, MD, CEO & Director]

So we do an actuarial estimate and -- which is a ULR estimate, and then ULR estimate is using data over a long period of time. One blip may not immediately impact the ULR number. Of course, the fact that frequency has come down in the near term will have some impact, but we would want to watch the data over a period. And as I said, for short-tail business, let's say, like OD, we will want to do it in a year. For long-tail, it will be even longer.

[Rishi Jhunjhunwala, Research Analyst]

Fair enough. And secondly, on health, can you just give some numbers of data points in terms of where we are on COVID-related claims versus where the industry is, if at all, you have these numbers? And how do you expect it to rise and where it could potentially be as a proportion of your normal claims that you typically have? Just trying to understand basically, incrementally, how much of the health claims could be coming from the COVID side?

[Bhargav Dasgupta, MD, CEO & Director]

Gopal, you have the numbers of the COVID, and I can talk about the expectations for the future after that.

[Gopal Balachandran, CFO & Chief Risk Officer]

So if you look at, Rishi, I think, the number of COVID claims, largely, I think, as what we explained. With respect to this particular quarter, I think we have seen more of claims coming in, in respect of COVID treatment. For the quarter, obviously, that number is roughly in excess of 1,000 claims. So as we speak, it's closer to maybe about 1,200, 1,300 claims is what we would have seen on the overall COVID policies. And the amount involved is roughly about INR 20 crores or so. So that's the impact for us with respect to COVID cases.

[Bhargav Dasgupta, MD, CEO & Director]

Yes. And for the future, Rishi, is we are staying cautious. We are -- I don't think anyone would have credited a 1 million number by this time. While right from beginning we have been saying, if you remember that the risk is high in this if things don't kind of taper out sooner. So even in the May call we talked about the fact that the frequency for non-COVID cases have come down, but we would have to watch the COVID claims. So again, it's very difficult to predict this and say that this will go up to a certain level. The numbers are increasing. It's not something that is causing any -- very large concern at this point in time or panic at this point in time, but it's something that we are watching with a lot of caution. But on balance, we -- given the benefits on the other side, the non-COVID claims have come, we are hopeful that aggregate for the year would not be out of line in terms of the loss ratio. But we could be wrong and COVID could go out of control. That's the caveat that I will give in terms of crediting anything on the loss ratio on the health side.

[Operator]

The next question is from the line of Nidhesh Jain from Investec Asset Management.

[Nidhesh Jain, Analyst]

Sir, can you comment on the frequency in the motor OD and motor TP in the month of June and how this is compared from pre-COVID levels? And are we seeing frequency -- the estimate frequency similar to those are lower than that?

[Bhargav Dasgupta, MD, CEO & Director]

Yes. So April, the frequency was very, very low for obvious reasons. And every month, we've seen significant increase in the frequencies. June month, at this point in time would still be maybe 15%, 20% frequency lower than pre-COVID on the motor OD side. But it's a very rapid increase from what we saw in April, which is also kind of in line with expectation because for the reasons that I talked about earlier. And even now, I think some of the bigger cities, the vehicle usage is still muted. So we are kind of in line with our anticipation and expectation, we believe the frequency will go back to normal in due course, which is the reason why we are saying this should be looked at with the annual length rather than a quarterly length.

[Nidhesh Jain, Analyst]

Sure, sir. And sir, secondly, what is the reason for business promotion expense remaining flat? Because I believe this year, let's say -- this quarter the sales on the motor side has been quite muted and that declined. So what is the reason for business promotion expense being similar on a quarter-on-quarter basis?

[Bhargav Dasgupta, MD, CEO & Director]

Gopal, you have the answer?

[Gopal Balachandran, CFO & Chief Risk Officer]

So that's primarily because I think it's purely a function of what kind of opportunities do we see in terms of growth. And as we had kind of explained, I think in this quarter relatively the kind of volumes of opportunities that one would have seen has been far lower than what we would have seen in the past. And as we look forward, and obviously, the growth momentum looks positive. And to that extent, one would calibrate the extent of sales promotion expenses that one would incur. In the current quarter, purely driven by the extent of opportunities that we see on the revenues. And to that extent, it's why you get to see the sales and promotion expenses pretty much remaining constant.

[Nidhesh Jain, Analyst]

Is it a variable line item or is it a fixed line item? So going forward, will your -- what are you implying that it can define going forward?

[Gopal Balachandran, CFO & Chief Risk Officer]

So as I said, I think it will be purely a function of the opportunity that one sees. In case, if you believe that there are opportunities to kind of ride incremental growth, then, obviously, we will calibrate and see what is the extent of sales and promotion expenses that one will have to incur. So it will not necessarily be a cost of a fixed structure unlike what you see in terms of employee cost or, let's say, infrastructure expenses. Those all are expenses which will be, in that sense, completely fixed. But so far as advertisement, sales promotion, marketing, those are expenses that we calibrate basis the opportunity that one sees. So for example, you would have also seen in the month of July, we kind of launched a campaign in order to kind of restart the health opportunity that one sees. So those are avenues through which we look at playing this through. And to answer your point, it will not necessarily be a cost which will be of a fixed nature.

[Operator]

The next question is from the line of Udit Kariwala from AMBIT Capital.

[Udit Kariwala, Research Analyst]

Hello? Am I audible, sir?

[Bhargav Dasgupta, MD, CEO & Director]

Yes.

[Udit Kariwala, Research Analyst]

Yes. So sir, my question was that in terms of the cat reinsurance which you explained and the cap of around INR 25 crores, is that for catastrophic event or, let's say, if you have 2 events in a year, it will be INR 25 crores plus INR 25 crores. So can you give some sense around that?

[Bhargav Dasgupta, MD, CEO & Director]

Yes, the answer is yes. And basically, it's a treaty that you signed at the beginning of the year which says -- and there is a certain clause which basically says that loss within the 7 days is what is covered as 1 cat event. But let's say, 3 months -- but as Gopal explained, we pre-agree a cost to reinstate the cover and their finite number of reinstatements that are also agreed. So you reinstated the cover. And the reinstatement cost depends on how big was the claim. So if the reinsurers paid INR 10 crores -- I mean, you took INR 25 crores, the reinsurer took INR 10 crores, then the reinstatement cost will be low. But if the reinsurers had to pay INR 500 crores, then the reinstatement cost will be high. So once it's reinstated, it's again, as if it's a fresh treaty. And let's say, 6 months later, there was another cat and again, it crosses INR 25 crores, again, we'll take a hit of INR 25 crores and again, the reinsurers will pay the balance.

[Udit Kariwala, Research Analyst]

But -- so in case of COVID how…

[Bhargav Dasgupta, MD, CEO & Director]

COVID is not -- COVID is different. COVID is a pandemic. It's not a cat event.

[Udit Kariwala, Research Analyst]

So on -- that is why you said that it could go out of control because that would not be covered?

[Bhargav Dasgupta, MD, CEO & Director]

Yes. Yes. COVID is not covered by -- pandemics globally are not covered because it is not coverable by insurance without support.

[Udit Kariwala, Research Analyst]

So on that, you would have an unlimited loss kind of a scenario.

[Bhargav Dasgupta, MD, CEO & Director]

Yes. If COVID really goes out of control and as a country we are not able to kind of bring it under control, yes, that is a risk. We are hoping and at least our models are not showing something like this at this point in time, which is why we are saying that we are watching it with caution. It is not something that we are kind of overworrying it about because on the non-COVID side, there are equally some savings. But on balance, that's a risk that we carry at this point.

[Udit Kariwala, Research Analyst]

And one last thing which is related is that you said around 1,200 to 1,300 claims in first quarter and the payout was around INR 20 crores, which roughly means that the each claim on an average was upwards of INR 1.6 lakhs. If I go back to the calculation which was shared earlier, like in 4Q, was that INR 50,000, INR 60,000 kind of is what the management was estimating, given the treatment cost may not be high, which is not panning out right. Can you give some sense around that because the…

[Bhargav Dasgupta, MD, CEO & Director]

Yes, if you've seen the press and the overall narrative on what is happening on the cost of COVID treatment and the reaction of even the policymakers on what's happening, it's obvious that the COVID treatment costs have been surprisingly high compared to what probably everyone felt is reasonable. And I think this is one issue that is becoming quite an issue between the payer and the provider industry because we are finding some very -- in a sense, outlier claims which we believe is unreasonable. And what it does is, even if, let's say, we end up paying for the customer, it really affects them -- it's not that the customer is not affected. We may be paying the claim. But what happens is if you have a INR 5 lakhs sum insured and a claim that logically could have cost INR 1 lakh and it becomes INR 3 lakhs, you are left with now INR 2 lakhs cover for the rest of the year because you've consumed INR 3 lakhs of your sum insured. So this is an issue that is becoming quite, if not only with the policymakers and you've seen actions by state, Supreme Court, et cetera, but equally, between the insurance industry and the hospital industry, there's a lot of negotiation and debate going on, on what is reasonable and fair. As we see, there's been a lot of debate and negotiation and arguments that are going on right now. I think the costs are completely out of control in certain places and there needs to be some reasonable business to the cost.

[Operator]

We'll be able to take one last question. We take the last question from the line of Nischint Chawathe from Kotak.

[Nischint Chawathe, Associate Director & Senior Analyst]

Yes. Am I audible now?

[Bhargav Dasgupta, MD, CEO & Director]

Yes, you are. Nischint.

[Nischint Chawathe, Associate Director & Senior Analyst]

Okay. Just 1 or 2 things. What has really happened on the solvency side? I think our solvency ratio has increased this quarter.

[Bhargav Dasgupta, MD, CEO & Director]

Okay. Gopal?

[Gopal Balachandran, CFO & Chief Risk Officer]

So Nischint, I think what we have kind of also explained last quarter is I think when you look at the solvency insofar as 2, 3 aspects. One is with respect to the fair value change account movement that you had seen. Insofar as solvency regulations are concerned on the equity side, the regulation disregards any gains, if at all, is there on the mark-to-market position on the reporting date. However, if there is a loss that has to be considered for the purposes of solvency. And if you would have seen on 31st of March, we had a mark-to-market loss of roughly about INR 430 crores. That was considered as a part of the solvency computation on March 31. As at 30th June, if you would have seen our mark-to-market on the equity portfolio as compared to INR 430 crores of loss is -- has ended the portfolio with INR 38 crores of loss. So that clearly is a function of the movement that one sees insofar as improvement in solvency is concerned. The second is also purely a function of what you get to see in terms of incremental revenue growth. In this quarter, I think pretty much similar to what the industry is experiencing. One has seen a relatively lower top line growth or a degrowth to the extent of, let's say, 4%, 5% or so. And that by itself also kind of contributes to the improvement in solvency. And the third factor is, let's say, the performance in terms of our operating outcomes on the profits that we make is also a contributor to the overall solvency numbers. So a factor of all the 3 is what has led to the increase in solvency moving up from 2.17x to 2.5x.

[Nischint Chawathe, Associate Director & Senior Analyst]

Sure. And did you share the number for advanced premium for the quarter? I think last quarter was 30…

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes. Last year was INR 30.25 billion at 31st March. That number at 30th June is INR 30.31 billion.

[Nischint Chawathe, Associate Director & Senior Analyst]

Yes. It's almost kind of flattish.

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes.

[Nischint Chawathe, Associate Director & Senior Analyst]

And just one last question was on the outlook for -- of competition in motor OD segment. I think your -- this time around, you have seen some improvement in the loss ratios out there. So should we say that the worst of the competitive phase on the motor OD side is behind us?

[Bhargav Dasgupta, MD, CEO & Director]

It would be difficult to say yes. And as I've been saying, maybe for the last 2 calls, I think last maybe about 18 months to 24 months, industry has been hurt a lot with -- on the OD side because of aggressive competition. And our take was that whether people can sustain that. But right now because of everything that we are saying, the frequency has dropped, so one can't rule out continued aggression on OD side. Having said that, as I said, as premium frequencies come back, the short benefit of maybe 1 or 2 months may not sustain. In which case it will be very difficult for people to be further aggressive on the OD side. OD loss ratios are probably unsustainable for most companies at this point in time.

[Nischint Chawathe, Associate Director & Senior Analyst]

Okay. Just one last one. On the COVID side, I think what you highlighted was that your core policy claim is around INR 2 lakhs. So I think you pointed to a number like close to that. So I was wondering, is it fair to…

[Bhargav Dasgupta, MD, CEO & Director]

No, no I pointed a number which was a lower number than that, but anyway, tell me. Yes.

[Nischint Chawathe, Associate Director & Senior Analyst]

So what do you -- I mean where do you think this number really settles down, I guess, with the negotiations, et cetera, that happens with the OD loss.

[Bhargav Dasgupta, MD, CEO & Director]

Look, again, as we speak, there is a lot of discussion and negotiation going on. I won't want to hazard a guess on this call and give you a guidance that I could be wrong with. Obviously, we are trying to attempt to bring it under control. Our sense is that it's -- at this point in time, it's not reasonable cost. But it depends on many factors, right? Location, the severity, the comorbidity, which links it to the length of stay for the patient, whether the case is mild, severe, critical. So there are many factors. And the mix is what determines finally to your cost because hospital also have to get a fair cost if it's a critical case in ICU, ventilated, et cetera, versus someone in the mild just being kind of under observation. So it depends on all of the mix. But we will have to see what is it. I really can't give you any comfort on where it will go to.

[Operator]

We'll take that as the last question. I would now like to hand the conference back to Mr. Bhargav Dasgupta for closing comments.

[Bhargav Dasgupta, MD, CEO & Director]

So thank you, everyone. Thanks for joining us at this time. And again, I wish all of you a good health and take care of yourself. Thank you.

[Gopal Balachandran, CFO & Chief Risk Officer]

Thank you.

[Operator]

Thank you very much. On behalf of ICICI Lombard General Insurance Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.