ICICI Lombard General Insurance Company Ltd

NSE:ICICIGI

Earnings Call Transcript 2022-Q1

[Operator]

Good evening, ladies and gentlemen. A very warm welcome to the ICICI Lombard General Insurance Company Limited Q1 FY '22 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 and CRO; Mr. Sanjeev Mantri, Executive Director, Retail; Mr. Alok Agarwal, Executive Director whole sale. Please note that any statements or comments that are made in today's call that may look like forward-looking statements are based on information presently available to the management and do not constitute an indication of any future performance as future involves risks and uncertainties, which could cause results to differ materially from the current use being expressed. [Operator Instructions] I now hand the conference over to Mr. Bhargav Dasgupta M.D. and CEO, ICC Lombard General Insurance Limited. Thank you, and over to you, sir.

[Bhargav Dasgupta, MD, CEO & Executive Director]

And good evening to each one of you. Thank you for joining the conference call of ICICI Lombard General Insurance for quarter 1 of FY '22. Hope you and your colleagues are safe and healthy. First and foremost, allow me to offer prayers and thoughts to those who have lost their lives to COVID-19. Let me also appreciate the hard work and the dedication of all health care and frontline workers and particularly our employees for relentlessly working during such turbulent times. I will give you a brief overview of the industry trends and developments that we have witnessed in the last few months, followed by emerging demand trends and opportunities. Post this, our CFO, Mr. Gopal Balachandran, will share the financial performance of the company for the quarter ended June 30, 2021. The second wave of the pandemic in our country that peaked in May 2021 has been devastating and much deeper than the first wave that peaked in September last year. Consequently, derailing the growth recovery that had commence in the second half of last year. However, the pace scale of vaccination, along with the fact that long-term the localized is expected to help the revival of growth, though there continues to remain challenges for though there continues to remain challenges for the economy to reach a level of potential growth this year given the risk of a third phase, disrupted supply chains, aggregate consumer demand and the large contraction still seen in certain specific sectors. Turning to the GI industry. During this quarter, motor insurance muted growth due to 2 consecutive years of slowdown leading to a lower base for retention, and postponement of motor insurance due to restricted mobility due to COVID-19 induced lockdown in some parts of the country. Health Insurance, on the other hand, continued to show robust growth for the industry, which was driven by enhanced awareness due to the pandemic and an attitude shift of consumers towards protection. As far as commercial lines are concerned, the growth in the fire segment moderated on a higher base, while marine and engineering lines witnessed some pickup due to the base effect. Overall, as per disclosures on the website of IDI, the general insurance industry registered a growth of 13.8% on Q1 of FY 2022 over Q1 of 2021, with the industry GDPI moving up to INR 444.3 billion in Q1 of this year from INR 390.55 billion in Q1 of FY '21. During the quarter, we continued to face headwinds in front of -- in the form of elevated COVID health claims, no revision in prevailing motor third-party tariff rates and [Indiscernible]. Speaking of our experience, the recent COVID-19 wave has been challenging and very different from the 1 last year. Operationally, we were better prepared for remote working and seamless delivery of operations. and continue to prioritize employee health and safety. In spite of that, over 10% of our employees got affected with the virus, and we lost 16 of our colleagues. We provided COVID-19 health line for any support and advice for COVID-19 affected employees or their family members, among other employee benefits, which included doctor consultation, bed requirement, insurance-related support, home care reimbursement, salary advance and additional leave among others, thus positively impacting over 2,300 lives. We also undertook a pan-India aspiration drives that began in June for our employees and their family members. I'm happy to share that over 80% of our employees have been vaccinated till date at least with 1 jab. Turning to the business impact during the quarter. Firstly, the main challenge during the second wave was significantly higher number of reported COVID-19 claims and the longer reporting tail than what we witnessed in the first in wave 1. Although the average day period had come down during the second wave, the moderate and critical cases had substantially increased and subsequently, the cost of stay in these cases. Also like the first wave, the second wave impacted[Technical Difficulty]

[Operator]

Sorry to interrupt. We can not hear you, sir. Ladies and gentlemen, thank you for patiently holding. The line of the management is connected us. Thank you, and over to you, sir.

[Bhargav Dasgupta, MD, CEO & Executive Director]

Sorry about that. I believe my voice was not coming through clearly. I covered some of the impacts that we [indiscernible] our employees. And I was talking about the business impact when I think I got disconnected. So I'll turn back to the business impact during this quarter. So the main challenge during the second wave that we saw was significantly higher number of reported COVID-19 claims, overall cases, and the longer reporting tail than what we've witnessed in wave 1. Although the average pay period had come down during the second wave, the moderate and critical cases had substantially increased and so did the cost of stay in these cases. Also, unlike the first wave, the second wave impacted the affluent class, having better insurance penetration and higher commission. Taking you through the claims pattern for the overall industry, COVID-19 claims reported for quarter 1 of this year has already crossed 1 million in comparison to 0.98 million cases in the whole of last financial year, of which 4% of the claims were reported with us. Secondly, the claim frequency of elective surgeries during the quarter saw lower dip in comparison to what we saw last year. Although the number of claims continues to remain marginally below the pre-COVID level. And thirdly, the motor own damage claim frequency had a lower reduction as we had local lockdowns in some states, unlike a complete nationwide lockdown that we saw during the same period last year. As a result, the benefit that we received on account of motor audits this year was lower in comparison with what we saw last year. The reserving philosophy for us has remained the same, which is spreading any benefit on account of favorable development over a period whereas taking any hit due to unfavorable development on an immediate basis. Now while we were cautious on underwriting group health portfolio during the last quarter, we remain excited about the long-term opportunity in the health insurance segment. For us, retail health will continue to be one of the fastest-growing segments, and we will keep investing and expanding product lines, driven by consumer needs, enhancing digital and people capabilities and strengthening distribution engine. Towards this, we plan to further strengthen our head count by adding another 1,000 people in the retail health sales force. Now given the recent adverse experience on loss ratios under the health portfolio due to the second year of COVID 19, in order to make the book sustainable in the longer run, we have started to increase the average premium per life for a given exposure in the group Employee Health segment. We have been affecting increase in average premium on life in ranges of 15% to 20% in consultation with the channel partners and clients based on the past claims experience as well as keeping in mind the COVID-19 pandemic is far from over. Our long-standing investment in technology was accelerated last year resultantly with over 97.3% of our policies being issued by us for the quarter ended 2022 was in paperless form. Under the SME segment, close to 90% of the business sourcing went through these digital solutions. Our holistic insurance and wellness app all take care that is curated to provide a gamut of health care and insurance services has surprised 7 leg downloads. Our objective is to get closer to our customers by providing a unique platform for continuous engagement to help them take care of their health, motor and other risks. At the outbreak of the second wave as a socially responsible organization, we took several timely measures in providing support to the community at large. We supplied 1,000 oxygen concentrators across select locations that had witnessed a rapid increase of COVID-19. We partnered with a leading hospital to set up a 58-bed dedicated COVID care center in New Town West Bengal. We organized free vaccination drives for the under privileged citizens in Mumbai. Over 10,000 such vaccinations have been completed as part of this initiative so far, with a plan being to vaccinate a total of 50,000 individuals at the earliest. We are also providing free vaccination and COVID-19 test support to 2,500 senior citizens. While these are small efforts in the larger context, we believe that collectively, India can play a crucial role in mitigating the impact of the pandemic. As we speak, the extent and impact of the third wave, if any, of the pandemic continues to do, we are only hopeful that we will never have to go through the experience that we had over the last 3 months, not just as a company but as a country. For us at ICICI Lombard, we have built over the years a well-diversified portfolio mix that positions us to uniquely capitalize on the present conditions. We are confident about our ability to grow our business in preferred segments and continue to create long-term value for our shareholders. We continue to maintain strong capital position and strengthened reserves even during the challenging times. I will 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 to each one of you. I will now give you a brief overview of the financial performance of the company for Q1 FY '22. We have put up the results presentation on our website. You can access it as we walk you through the performance numbers. Our gross direct premium income of the company stood at INR 37.33 billion in Q1 FY '22 as compared to INR 33.02 billion in Q1 FY '21, a growth of 13%. This was largely in line with the industry growth of 13.8%. Our focus on preferred segments primarily drove our GDPI growth. The Fire segment registered GDPI growth of 12.7% in Q1 FY '22, thereby capitalizing the GDP growth of our Property & Casualty segment. The growth in this segment has normalized, consequent to the rate hike that happened in January 2020. As indicated in our results presentation, the overall Property & Casualty segment grew by 18.6% in Q1 FY '22 over Q1 FY '21. On the retail side of the business, in the motor segment, we registered a muted growth of 1.9% in Q1 FY '22. Individual Health Interunity business grew by 20.4% for Q1 FY '22. Our SME segment delivered 21.3% growth for Q1 FY '22. To harness the potential of this segment, we have been expanding our distribution network to increase penetration in tier 3 and tier 4 cities. Our agents, which include the point of sale increased to INR 61,385 as at June 30, 2021, up from INR 59,545 as of March 31, 2021. The advanced premium was INR 32.11 billion as at June 30, 2021 from INR 32.06 billion as at March 31, 2021. Combined ratio increased 121.3% in Q1 FY '22 compared to 99.7% in Q1 FY 2021. The combined ratio includes as per actuarial practice assumption of tick tail of claims to factor delay in reporting of health claims. The combined ratio includes impact of COVID claims on Health book of INR 6.02 billion, of which INR 3.84 billion of claims were incurred and claims incurred but not reported, IBNR provisions was INR 2.18 billion in Q1 FY '22. As against INR 0.20 billion in Q1 FY 2021 and INR 3.39 billion in the whole of FY 2021. The reasons for the combined issues to be elevated for this quarter are, as Bhargav spoke, significant surge in COVID cases intimated from just about 1,300 cases in Q1 FY 2021 and about 50,000 cases for the whole of FY 2021 to about 46,000 cases just for quarter 1 FY 2022. As mentioned by Bhargav, non-COVID health claims count saw a sharp price of 111.8% in this quarter 1 FY 2022 as compared to Q1 FY 2021. While we saw some benefit on motor, however, the benefit was lower than what we saw during the same period last year. There was an increase in motor OD claims count by 75% in Q1 FY 2022 as compared with Q1 FY 2021. Cyclone and flood losses increased to $0.38 billion in Q1 FY '22 as compared to $0.35 billion in Q1 FY 2021. Our investment assets rose to INR 320.75 billion at June 30, 2021, as compared to INR 308.92 billion at 31, 2021. Investment leverage net of borrowings was 4.16x at June 30, 2021, as compared to 4.09x at March 31, 2021. Investment income increased to INR 7.23 billion in Q1 FY '22 as compared to INR 4.99 billion in Q1 FY '21. Our capital gain was at INR 2.44 billion in Q1 FY '22, as compared to INR 0.61 billion in Q1 FY '21. Our mark-to-market gains on the investment portfolio was at INR 15.26 billion at June 30, 2021. And this number was INR 14.13 billion at March 31, 2021, and INR 10.66 billion at June 30, 2020. The company has exercised the call option to redeem the debentures of INR 4.85 billion in full, along with the final interest due which is post the receipt of the necessary regulatory or statutory approvals on July 28, 2021. The record date for the same was July 12, 2021. Our profit before tax stood at INR 2.02 billion in Q1 FY '22 as compared to INR 5.31 billion in Q1 FY '21, a day growth of 62.1%. Consequently, profit after tax stood at INR 1.52 billion in Q1 FY '22 as compared to INR 3.98 billion in Q1 FY '21, a degrowth of 61.9%. ROE was 8.1% in Q1 FY '22 as compared to 25.1% in Q1 FY '21. Solvency ratio was 2.76 at June 30, 2021, as against 2.9x at March 31, 2021, continued to be higher than the regulatory minimum of 1.5x. In so far as the progress in relation to the scheme of arrangement with Bharti AXA is concerned, we received the NCLT approval during the quarter, and we await the IDI final approval in the matter. The expenses incurred of INR 0.06 billion have been absorbed in the P&L during Q1 FY 2022. As I conclude, I would like to reiterate that we continue to stay focused on building a profitable growth and sustainable value creation and would like to thank you all for attending this earnings conference call, and we'll be happy to take any questions that you may have. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Deepika Mundra from JPMorgan.

[Deepika Mundra, Research Analyst]

So just on the ID and RF, IBNR if I see the results in the P&L, it reflects that the IBNR is up I think, from INR 5.4 billion to INR 11.4 billion. But you mentioned that on the health side, the IBNR is just about INR 2 billion as part of the INR 6 billion odd claims. Can you help reconcile that what is the increase for? And secondly, the 15% to 20% increase in pricing on group health has that already gone through? Or is it expected to go through in the near future?

[Bhargav Dasgupta, MD, CEO & Executive Director]

So let me answer the second question first and -- a bit of the first, and then I'll ask Gopal to cover the rest. So the -- since we saw the COVID numbers spiking and one of the points that we -- both of us made is that this time the pattern is a bit different in the sense that the detail seems to be thicker in the sense that the reimbursement claim percentage is a bit higher, which means some of the claims are getting reported a bit late compared to what we saw in wave 1. So that has been a bit -- and you figured this out in time, right? You cannot anticipate the same priority. So what we did was when we were beginning to see these numbers going up, we started recalibrating our pricing. And as we speak, to answer your question, Deepika, yes, the pricing has -- whatever we are writing now, the group side, we are writing at a higher price. So we have 2 different segments. One is we have the load, the SME segment, which we keep talking about, right, where we write smaller groups. There, it's a more gradual price increase than we do in any case, and there also, we've done a price increase. For large accounts, we -- these numbers are more relevant for the large account. There, those price increases are going through, of course, client specific, but that's going through. Coming back to your question on IBNR, the number that Gopal gave was specifically for the COVID impact, which is, in a sense, related to last quarter, a bit of a one-off. But the overall aggregate numbers are the aggregate IBNR numbers. But I'll ask Gopal to clarify the breakout.

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes. Yes. So Dipika, I think what you're seeing is basically the change in the IBNR over different periods. Now that's obviously a function of payments that would have also happened out of the IBNR reserves that you create. And hence, to that extent, when you compare between periods, you may not really be able to get a like-to-like comparison. Let's say, for example, whatever IBNR that you would have reserved in, let's say, Q1 last year, a lot of it would have already kind of maybe got settled during this last 12-month period, and incremental IBNR, what we create, not just for health while we put out the numbers specifically in the context of health, as a part of the same LODR reporting that you're referring to, there is also information that is available with respect to the outstanding IBNR that is existing for each of the segments. So what you see as a change in IBNR is purely position between periods that can undergo a change basis the actual claim payment that happens across different segments. A better outcome would be to maybe look at more maybe the loss ratio numbers between different segments, which comprises of both IBNR plus the claims that has got paid during the respective periods. And on that basis, if you would have seen, I think as a part of the investor presentation, which we have put out segment by segment, what is the change that we have seen in so far as the overall loss ratio movements are concerned.

[Deepika Mundra, Research Analyst]

Understood. Just a follow up to that. This is growing the health business, both in group[Technical Difficulty]

[Bhargav Dasgupta, MD, CEO & Executive Director]

Deepika, we couldn't hear you.

[Deepika Mundra, Research Analyst]

Can you hear me now?

[Bhargav Dasgupta, MD, CEO & Executive Director]

Better. Yes, better.

[Deepika Mundra, Research Analyst]

Okay. So I just wanted to understand the thought process on growing the health business in the context of a potential third wave, if any? And secondly, would the results be accounting for future losses the warrants, which is beyond this IBRN also.

[Bhargav Dasgupta, MD, CEO & Executive Director]

Yes. So again, your second question first, have we factored and created a reserve for a potential third wave of COVID? The answer is no. We can't do that. We cannot created a reserve for some claim event that will happen in the future. What we can do is create a be conservative and reserve for the IBNR based on actuarial and statistical models. That's what we have done for health. And as we've said, we -- our principle is that when we move our adverse effect, we take the full hit upfront. -- when we also know of a beneficial effect, we don't take the full hit upfront. So let's say, on the motor OD side, we like last year, we have stayed with the same principle of spreading the benefit over a period -- And if you look at, let's say, last year, just to amplify the point, if we look at last year, ICICI Lombard motor loss ratio in Q1 and for the full year was similar, roughly about 65%, 66%. For the industry, the first quarter loss ratio in motor was 67% for the whole year 75%. It just tells you the principle that we follow, which is -- again, we've discussed this many times. So we've been conservative in that sense. But we cannot anticipate a future event and provide for it. That is not allowed in our register. Now coming to your point on -- so third wave. So we've taken a fat tail in the IBNR on the COVID, but whether a third way will come and what number will happen, that we have not anticipated. In our future expectation and estimation, we are anyway assuming a continued tail of covet places. So for example, right now, we are seeing 40,000 cases -- 40,000 infections in the country, incrementally every single day. Now whether that will continue for too long or not, but -- we don't know, but there is that number. So we are assuming that for a future outlook, but not in the reserving.

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes. I think the only thing that I will just add on, I think when we also did the estimation of IBNR as we kind of put out as a part of the opening remarks, this wave specifically Deepika, we have clearly seen detail of reporting to be relatively longer given the fact that the number of intimations have been substantially on the increase. So we have seen, let's say, for example, the proportion of intimations that would have come through reimbursement, is far higher than the proportion of reimbursement that we have seen in so far as wave 1 intimations are concerned. And secondly, we have also seen the reporting time period within which a customer logs in for a reimbursement claim that also under wave 1 has seen an increase in comparison to what we have seen under wave 1. So that's the reason why factoring in for this relatively longer tail of claims and the claim pattern that we have observed during wave 2 in comparison to wave 1 is what we have kind of factored in for that incremental IBNR of INR 2.18 billion. Obviously, we will have to wait and see how the development plays out as we see over the next few months, and kind of factor in for the appropriate impact thereof. And to your first question in so far as the investments in health I think that's clearly -- we have always articulated health as an area of opportunity. I think both whether it is in the context of employee, obviously, we have always kind of played that particular segment tactically over a period of time, depending on the underlying environment that's operating in the market. But on the retail side, clearly, as we have spoken over the past several quarters. That's clearly an area where we think there is enough and more continued investments in distribution that we can do. And that's where, again, we believe this is the right time, given the potential that the segment has, we are kind of going ahead with making that incremental investment of expanding our workforce, particularly on the front line distribution by additional 1,000 people, who, in turn, obviously, will be kind of significantly working towards expanding the distribution force. Because at the end of the day, if you look at -- on the retail health specifically, the extent of market share that we will have is a single-digit number. And we believe there is a long headroom for growth in that segment. And these are times where we need to continue to make our investments in expanding that particular portfolio.

[Bhargav Dasgupta, MD, CEO & Executive Director]

And just to add to 1 comment on your point on your concern on third wave in that context. So when we build a team we don't see incremental business revenues come through immediately. So by the time the team comes in and starts becoming productive, effectively, we'll see a business impact really next year. So if worst case, if we see another wave this year, I don't think there's any incremental risk because of this.

[Operator]

The next question is from the line of Ajox Frederick from BNP Securities.

[Unknown Analyst]

Sir, my question is mainly with just the IBNR. So have we factored -- are we factoring in till 30th June. So that's what is IBNR is composing for the players which are not yet intimated. Or are we assuming a tail going forward, and that is also factored in part of IBNR.

[Gopal Balachandran, CFO & Chief Risk Officer]

So job to answer your point, as Bhargav explained, I think in so far as the regulation is concerned, we can largely kind of reserve for any claims. As the term IBNR indicates, these are claims that are likely to have incurred or happened during the quarter, but for which, let's say, reporting has not happened. So that's the provisions that we carry in our financials. So the number of the INR 2.18 billion that you have seen is predominantly for the intimation given the points that I spoke about in response to the earlier question that Deepika had asked. It is to kind of factor in for any likely delay in intimations which are expected to happen in the months of, let's say, July, August or September or maybe even thereafter, for likely admissions or claims that would have happened in quarter 1.

[Unknown Analyst]

Okay. So these games have already -- the cases have already happened in 1Q and for that. Okay. Got it, sir. Sir, now coming to the second part of that question, which is like you said, going forward, it's difficult to estimate and so on and so forth. But you might have done some back work of the competition to keep the facts for it. Like what is the sense you are getting? Just for me, I'm getting your sense like around INR 200 crores, INR 250-odd crores that to come in, of course, very good competition. But have you done any internal math? And can you review from that end?

[Gopal Balachandran, CFO & Chief Risk Officer]

Yes. We've done our modeling. I mean, like every time we do this, honestly speaking, estimating the time and the ferocity of wave 3 is really challenging. And again, there are, as you know, multiple news on whether it will happen or even if it happens, will we have the U.K. experience where because of higher vaccination, the hospitalization will be lower, et cetera. These are really you can throw up multiple numbers reasoning with the small tweaks in the assumption on the wave 3. So it's very difficult to predict.

[Unknown Analyst]

I was talking about the current wave. [Indiscernible]

[Gopal Balachandran, CFO & Chief Risk Officer]

So the current global extent, what we have seen is because there has been slightly more higher proportion of reimbursement claims and there is some amount of delay. Wherever there is uncertainties, good actually gets more conservative. So they do build what is known as margin for adverse deviation. So that is all built in to this IBNR number. Now in reality, if the numbers prove to be lower than what we do, that will come through and get released. But as of now, we believe that's an appropriate result.

[Unknown Analyst]

All right, sir. And on the price hikes, can't -- any thought on the retail side? And are we expected to go slow given the current scenario probably as a tactical call?

[Gopal Balachandran, CFO & Chief Risk Officer]

So tactically, we have been kind of -- we take the tactical calls in more of the group portfolios. And that's why I made that point in the beginning that we've been a bit cautious because we are beginning to see this towards the end of last year or early -- beginning of the quarter. But in retail, we believe that it is important for us to stay invested in a distribution and a channel. This is insurance, right? There will be a quarter where maybe a big cat event will happen. I mean, pandemic is something that doesn't happen every other day. But when it happens, it happens. But we have to stay invested in building the distribution and stay with that strategy. Having said that, we were a bit more cautious about adding the headcount that we've added now, simply because we've seen 2 waves, maybe another wave 3 will happen. And thereafter, at least we are hoping that things will stabilize a bit. So this investment will start delivering top line growth really from next year onwards. So that, if you can call it a tactical call, that's a tactical call. But otherwise, we want to stay invested in the health side, in the retail health side.

[Operator]

[Operator Instructions] The next question is from the line of Prateek Poddar from Nippon India Mutual Fund.

[Prateek Poddar, Research Analyst]

Sir, I just wanted to understand this INR 218 crores, if you can just give us some flavor as to how do we project this? And just taking this forward, look we have 40,000 cases every day. You had a 4% market share, as you talked about in your opening comments. Does that mean that 100 cases a day is something which is theoretically our size of claims, which might come to us in the worst case, and that can easily get absorbed going forward. Is that the way to think about it? That's question number one. And second is, sir, if you have taken a 20% price of PPT, then does that mean that from a volume growth perspective help us see a 20% volume decrease. And lastly, sir, motor growth has been quite slow this quarter. But despite you mentioning that there was only a partial lockdown. So I didn't understand why was that so. So yes, those are the three questions.

[Gopal Balachandran, CFO & Chief Risk Officer]

So let me try to clarify the answer the first question and clarify this piece as well as I can. So let's look at data, right? So if you look at as a nation in the country, for the whole year, there was roughly about 12 million COVID claims. This first quarter, as a nation, there was 18 million COVID claims -- COVID -- not claims, sorry, COVID cases. Let me clarify. 12 million COVID cases last year. First quarter, India saw 18 million COVID cases. The total industry claims -- so all of them just to explain that 40,000 doesn't mean everyone will claim. So out of this 12 million cases of COVID last year in the country, industry saw 986,000 cases of claims. Okay. Now in Q1, the industry saw 1,051,000 claims. So it's not as if every person effectively claim. Right? So because usual penetration issue, et cetera, of health insurance. Now if you now look at, again, comparing with the last year first quarter numbers, just for us, I'm now coming turning to our numbers. Last year first quarter, we had 1,317 COVID-19 cases, first quarter last year. This year, first quarter, we have 46,136 cases, almost more than 30x, about 35x. Right? What we've also seen is the percentage of reimbursement cases are higher this time than what we saw in Wave 1. Now the percentage of reimbursement, we can't predict at the beginning of the wave because we are just seeing the cashless claims, right? So when, let's say, we take -- get cashless claim of 100 in the first week or first month, we believe that it will be similar to last time. So last time, maybe there was a 50% reimbursement 50% cashless, we are assuming similar numbers will happen. But by June, we are getting a better picture for the April book because people start filing the reimbursement claims. And we are beginning to see that the reimbursement percentage is higher this time than what we saw last time. Hence, I would actuary looks at this pattern change and there is still data insufficiency for all the claims that people who have actually got hospitalized, may not have claimed from Q4 -- Q1. So we create a reserve, which is IBNR incurred as in the hospitalization has happened, but the claim hasn't been reported to us. So that is IBNR. Now in IBNR, we actually also kind of create some cushion, which is called margin for adverse deviation. From what is this model showing us the best estimate, and he holds a certain cushion. And whenever there is the amount of uncertainty, usually that margin for adverse divisin, cushion is slightly higher. So that's what actually has done, which is to look at this pattern of claims, the volumes, et cetera. And while intimated claims are the 384 numbers, He's hold a -- he's held a incremental IBNR of 200 plus. In due course, as all claims get reported, all reimbursement claims come through in the month of July, August for the first quarter, by the way, we will get to know maybe in 2 to 3 months, what is the full picture. Now if the number is less, then that will get released. Coming back to your next question of going ahead, 40,000 cases that will lead to what number of claims. It depends on which market the cases come from. If it's big site have percentage and all of those factors will come in, so difficult to predict what the numbers are really. Coming back to your question on motor. And before that question on...

[Unknown Analyst]

Health pricing. Yes. Volume degrowth of 20%.

[Bhargav Dasgupta, MD, CEO & Executive Director]

Yes. No, we didn't have a volume degrowth. We can separately give you the numbers, but the price increase that I'm talking about didn't happen from April onwards. We are talking about seeing price increase towards the latter of the quarter and more importantly now. We'll give you the volume number in due course. And in retail, we didn't see that kind of a price increase or a smaller price increase because we took a price increase on our core indemnity product back in November for renewal in January. That was already taken last year. Coming back to your last question on motor yes, our market share was slightly muted in Q1. There was a couple of impacts. One is that we have typically a slightly larger share of new, as a company. As the new sales gets affected, we also get affected. And we have 2 consecutive years of that. So last year, new sales didn't happen. So the renewal book for us in this quarter based on last year's book is also low. My sense is it's temporary. I think by this quarter, we should be back on track with assets. We are not overly worried about motor market share.

[Unknown Analyst]

Got it. Sir, 1 question, if I may squeeze in. Someone who has got COVID last year, let's say, of those 1,379 cases, when they come up for renewals, do they take higher pharma share and you charge a higher pricing because he has quoted, so are you being slightly more conservative in terms of giving it a higher price? I'm just trying to ask like behaviorally higher pharma share?

[Gopal Balachandran, CFO & Chief Risk Officer]

As per regulation, we cannot deny.

[Unknown Analyst]

Yes. Yes.

[Gopal Balachandran, CFO & Chief Risk Officer]

But what we do is, as I said, the retail portfolio pricing happens on a portfolio basis. So we go back to the regulator as hopefully, we asked a price increase, which we have done in, as I said, November of last year. So that price increase the customer will pay because that's our pricing. The pharma should increase. We have anecdotally see -- often, I don't have the numbers. But anecdotally, we have seen a higher proportion of upselling on pharma insurance that we are seeing on the retail portfolio in the India. But if you want separately, we can give you that.

[Operator]

[Operator Instructions] The next question is from the line of Neeraj Toshniwal from UBS.

[Neeraj Toshniwal, Analyst]

So my 2 questions, sir. First is on the health itself. So this 46,000 cases is -- [indiscernible] INR 384 crores total, that is our guess has kind of increased by 4.6% compared to what we had in FY '21. So symmetry is also kind of increasing because of the fact that probably, as you said, it is requiring a longer the expenses have been higher on the given the hospitalization, which had been there this time.

[Gopal Balachandran, CFO & Chief Risk Officer]

It's bit unclear. Sorry, we couldn't understand your question probably. If you could just repeat yourself a bit slowly, it's a bit unclear, voice.

[Neeraj Toshniwal, Analyst]

So my question is whether it has also increased the ticket size in this quarter for you guys. While -- because the average ticket size was INR 79,800 and on INR 384 crores or INR 46,000, the tickets has moved to INR 83,478. So it's on the -- though it's still below in the industry, but I think it has increased for us, the ticket sales payouts, average per claim.

[Gopal Balachandran, CFO & Chief Risk Officer]

So Neeraj, I think on claim severity, as we explained, definitely, even as a part of our opening remarks, what we had indicated was compared to wave 1 the proportion of cases that we have seen on the wave 2 with respect to, let's say, mild or critical cases, that has definitely seen an increase. So that by itself kind of -- moderate and critical cases, has clearly seen an increase compared to wave 1. So that itself kind of increases the overall average claim size. So that's one. The second is, in general, I think the extent of medical procedures that were performed in wave 2 as compared to wave 1, given the intensity of the virus that had attacked in this wave was also definitely higher. So hence, that extent, that also led to an increase in -- so far as claim severity is concerned. To some extent, the reason why you see more or less a balanced number is primarily because as we also mentioned, the extent of the length of stay that we have seen during this particular wave 2 as compared to wave 1 has seen some kind of a reduction in the number of days. So in that sense, it's a balanced outcome in so far as ACS is what we have seen. But yes, there is definitely an increase in claim severity on those points that I spoke about. And the extent of severity, again, is varied between geographies. I mean, for example, if you look at some of the metro cities, as we know, Delhi, Karnataka Mumbai, Tamil Nadu. I think clearly, these were 4 geographies where we had also seen a significant increase in number of intimations. And there, the extent of billings that we have seen in so far as average claim sizes are concerned, that was definitely on an increase. But on balance, I think when you look at the overall book, I think given a combination of what I spoke, the average claim size seems to be more or less on the similar lines as what we had experienced in the whole of -- in comparison to wave 1. But definitely, we have seen instances of increase in claims severity.

[Neeraj Toshniwal, Analyst]

Got it. And the second question is the motor. We started taking small price increases. What is the current scenario? Can you help with this on that? I mean, how -- is the price increase happening around?

[Bhargav Dasgupta, MD, CEO & Executive Director]

So rate market remains competitive. So -- and I think the market has seen like last time, some amount of benefit because of the temporary drop downs that some states did in this phase. So some of these are a bit sticky. So we have not seen the market shift in line with what we expected. Our sense is that it will take a bit of time, but it has to happen because the OD side is, I think, extremely competitive right now.

[Operator]

The next question is from the line of Madhukar Ladha from [indiscernible] Capital.

[Unknown Analyst]

Sir, I wanted to understand that given the current number of cases, let's say, 40,000 a day and you're modeling, for the next 9 months, July onwards, what sort of loss ratio in health, one can expect? Let's say, if the current situation stays the way it is, then what would be sort of the new normal? Or does that move significantly from what we used to see, let's say, in the previous year?

[Bhargav Dasgupta, MD, CEO & Executive Director]

Yes. So honestly, again, as I said, it's very, very difficult to predict the virology and the timing and the extent of the wave. So I will not comment on that. But -- because we've not even -- assuming that in the base situation at this point in time, that can be something that we will have to watch for. But in a BAU basis, on a base case basis, also there is a bit of increase in ACS average claim size that we are seeing, the claims severity that we are seeing for even non-COVID cases. Fundamentally, because what has happened in the hospitals is that there is some amount of increase in treatment costs because of maybe consumable cards, the PPEs that they use some other extra tests, et cetera, that is happening. So there is a slight increase in the ACS for even non-COVID. So keeping COVID I said, which is very difficult to credit. Even non-COVID, we are seeing some increase, which is why we feel it's appropriate to ask for a price increase on particularly the group has said. And hopefully, the retail increase that we've taken should access our objectives on the balance of the loss ratio. But I think there will be a slight shift up in the overall loss ratio for held book, even apart from the one-off COVID impact that we've seen in Q1. Exact quantification difficult to tell you, but we are expecting some increase.

[Unknown Analyst]

Understood. Sir. And there were a lot of numbers mentioned I may have missed something or I don't know whether that's already there in the presentation. But what was the number -- that 46,000 number is what we got in 1Q FY '22? And what was the number for the full year?

[Gopal Balachandran, CFO & Chief Risk Officer]

So last year, first quarter -- so you're right, 46,136 was the number of claims that got intimated for COVID in the first quarter of this year. Last whole year, for us, it was 49,266. Last year, first quarter, the corresponding quarter, the number was 1,317.

[Operator]

The next question is from the line of Nidhesh Jain from investec.

[Nidhesh Jain, Analyst]

If I look at the COVID claims impact in this quarter is around INR 600-odd crores, if I just add back to PBT, that becomes a very large number. So what is the benefit we probably have got on the non-COVID claims in the health vertical? So I'm just trying to understand what could be the normalized profitability had COVID not been there?

[Bhargav Dasgupta, MD, CEO & Executive Director]

So if you look at Nidhesh, again, as a part of the opening remarks, what we had indicated was unlike wave 1, where we had actually seen a reduction in non-COVID health intimations for example. If you look at wave 2, which is for the current quarter, the extent of non-coal health intimations are at almost 90% of the levels of, let's say, a business as usual quarter. which is something -- I mean in the normal course, you would have expected that whenever the COVID cases is at its peak, you would have expected, let's say, the non-core health intimations to have actually seen a reasonable decline in intimations. But that's not something that we have seen in this particular quarter. So hence, on so far as non-proved health benefit, as I said, because it's pretty much back to almost 90% of intimations to a BAU quarter we have not seen any significant benefit in so far as a reduction in claims is concerned. So that's so far as the health picture is concerned. On the motor side, I mean, since you're talking specifically about benefits. On motor, again, the picture is pretty much similar. I mean a better comparison is maybe quarter 1 of last year, quarter 2 comparison may not be relevant at least for motor because in quarter 2 last year, we had more or less seen the economic activities kind of opening up and claim intimations on motor was pretty much back to normal. So hence, the better comparison will be to look at it from a quarter 1 of last year, where there was a complete lockdown. Now at that point of time, the number of intimations that we had seen on motor-owned damage claims. That number was roughly at about 37% of, let's say, a normal business as usual quarter, around that 37% level. Whereas if you look at the quarter 1 of the current year, again, the trend line is similar to what I spoke on non-COVID health, wherein we have not necessarily seen as much of a decline in intimations. In fact, we have seen an increase of almost about 75% increase in number of claims. Or if I were to put the other way around, we have almost seen about 65% to 68% of intimations in this particular quarter in comparison to a normal business as usual quarter. So again, we have not seen as much of a benefit in motor own damage claims as well in comparison to the last quarter 1 of FY '21. And in -- while there is a benefit, but the way we have continued to recognize this benefit is the similar approach what we followed the last year, which is to be prudent in so far as recognizing the benefits entirely in this particular quarter. Rather, there is a possibility that some of these claims could kind of come back or maybe see an increase in the subsequent quarters. And hence, again, as we put out even as a part of our opening remarks, wherever we see maybe an adverse development, we generally, as a matter of prudence, tend to take from an actuarial standpoint, the goal of the impact in that particular period. But wherever we see any benefits, we again try to be prudent in looking at recognizing the benefit over a period. So when you look at the numbers now for the quarter 1, while on the health side, you saw an impact of about INR 602 crores, the benefit that I spoke about on the motor was roughly at about INR 60 crores. So on a net basis, what we have seen is about INR 540 crores of impact in this particular quarter.

[Nidhesh Jain, Analyst]

So in that context, our profit would have been INR 500 crores at this -- higher than INR 500 crores, if this would not have hit us, if COVID would not have it hit us?

[Bhargav Dasgupta, MD, CEO & Executive Director]

Yes. So we had a good quarter on the investment side related to last year because if you see your capital gains was particularly elevated. So that, of course, was a bit of a one-off as well.

[Nidhesh Jain, Analyst]

Yes, yes, understood. And secondly, on the app, we have got around 7 lac downloads. So can you share some more details about the monthly active user users? And how are we planning to cross-sell to these customers that have longer...

[Bhargav Dasgupta, MD, CEO & Executive Director]

So that's a great question. So that's what we are kind of building up for. So if you go back to the behind this app, it was started for our group health customers because normally, we have a relationship with the corporate, we don't build a relationship with the actual consumer or an actual customer. So this was started with that, and then we gradually -- we kept reverting it now is build as an app for all our customers. It's an engagement app for all our customers. And the whole thought process is that this in the long term would one, create better retention and renewals as also potential upsell cross-sell. Right now, the focus is -- was largely building the service platform and the partnership platform to provide some of these services. So for example, teleconsult, this is something that we wanted to be rolled out through this app. So these were things that were not necessarily focusing on upsell, cross-sell, but again, giving more service and features to -- that was the focus.Very recently, in the last quarter, we've now added the by policy feature only on the Android phone. You've not done it for the IOS. And we've now begun to see some decent traction in terms of numbers. Just to give you some sense, in terms of the teleconsult, what I talked about, even as recently as Q4 of last year, Q4 last year, we had roughly about 1,685 teleconsults. First quarter, we had 7,685 teleconsults. I mean these are not revenue numbers, but it's just engagement numbers that are picking up. As of now, the cross-sell upsell numbers are very small because as I said, we just -- In fact, in the month of -- towards the latter half of the quarter, we kind of added the buying flow capability, but we are quite optimistic about this piece going forward.

[Nidhesh Jain, Analyst]

Sure. And last question on the retail health. So industry is growing at 40%, 35%. This was a very good quarter in terms of awareness about health insurance segment, and we have also taken Tii last year. But despite that, our retail indemnity helped growth has been quite low versus what the industry is growing. So -- and now you are saying that we will be adding 1,000 people. So should we start hoping that we will start going in line with the industry going forward or...

[Gopal Balachandran, CFO & Chief Risk Officer]

So that -- that's definitely an area of investment for us, and that's eel the reason why we spoke about our continued thrust of expanding distribution in retail. And that's why even if you see the aggregate number of agents that we were able to work with. This is, of course, the company numbers. You would have seen that the total number of agents, which include the point-of-sale distribution, to be at about 61,000 plus, which is up from about 59,000. Now this number would have actually been slightly higher, but for certain challenges that we had in so far as enrollment of agents, given the pandemic wave that we have seen in this particular quarter that impacted every one. I mean, even in terms of agents who would have been available for enrollment, getting them licensed, our own people actually kind of put out almost 10% of our workforce was impacted as a result of this virus. Now all of that obviously had some impact in so far as growth of the retail health portfolio, when you look at the quarter 1 numbers specifically. But honestly, I think this continues to be one of our preferred segments, and we would want to kind of, as I said, leverage on the growth potential, what we see and want to make those incremental additions to the workforce of about 1,000 people, which in turn, as Bhargav explained, the benefit of incremental revenues, again, it's something that we will start to see flowing through maybe from the next financial year onwards.

[Bhargav Dasgupta, MD, CEO & Executive Director]

Also to add to that, Gopal, Sanjeev here, there are 3 categories on the health [Indiscernible] side. One is [Indiscernible], another is PHU and there is private sector, which is multiline companies. So [Indiscernible], of course, have grown from -- at more than 50% and the arbitral that is available in terms of the access to agent, which we have restricted and because of the pandemic, the exams are not happening. And otherwise also, yes, with this area, they were able to build a large distribution the multiline companies on average have grown at 23%, while we have grown at 28%, and the PHU have grown at 20%. So if you see the cohort wise, we have been ahead of the cohort in which we are operating. And with this investment, we believe that we'll be able to increase the market share going forward.

[Nidhesh Jain, Analyst]

And lastly, these investment...

[Operator]

Sorry, to interrupt you, Mr. Jain, may I request you to please rejoin the queue. We have participants waiting for their turn. The next question is from the line of Vinod Rajamani from HSBC.

[Vinod Rajamani, Asia Insurance Analyst]

Am I audible?

[Bhargav Dasgupta, MD, CEO & Executive Director]

Yes, Vinod, we can hear you.

[Vinod Rajamani, Asia Insurance Analyst]

Yes, yes. So just 2 questions actually, both related to the Health segment. So if I take the IBNR outstanding claims reserve numbers for health and personal accidents, for March 31, 2021. And if I take it for the first quarter in the release -- in the investors separate -- the P&L -- below the P&L that number, I get a I guess a INR 5.786 billion, which is 186,468 minus 128, 608. And if I look at the IBNR that you have provided in the results in the presentation, you have said, it is INR 6.02 billion.

[Bhargav Dasgupta, MD, CEO & Executive Director]

So Vinod, one, when you're looking at the numbers, again, when you're looking at the outstanding IBNR numbers, as I explained, whatever IBNR numbers that you would see as of 31st of March. Some of those would have kind of got settled during the quarter, and hence to that extent that we would have seen a reduction in the IBNR numbers. And incrementally, whatever claims have got reported, again, in this particular quarter, that's why we would give the impact of about INR 602 crores. This is in the context of COVID that I'm talking about. What you are talking about, of the IBNR numbers, what you see as a part of the LODR filing, is the IBNR picture for the overall health book, which includes a combination of IBNR for the retail portfolio as well as the employee portfolio as well. Now at any point of time, when you look at the reserving or, let's say, claim intimations as and when the claim gets intimated, there is a particular process that we follow in so far as settlement. And on that basis, either the claims will be a part of claims paid or in the event if there are actual cases that have been intimated yet to be settled, that will be a part of case reserves. And beyond this is where there is an actuarial estimate that happens, which is with respect to IBNR reserves. Now hence, when you look at the number of the outstanding position, let's say, as at 30th of June, it would include maybe certain cases of IBNRs, which is yet to be settled. That's one. And two, for the whole of the health book, whatever IV not that we have created is forming a part of the outstanding number. So it is not necessarily a like-to-like comparison that you can do in terms of the IBNR outstanding as of 31st March vis-a-vis, let's say, IBNR outstanding as of 30th of June.

[Vinod Rajamani, Asia Insurance Analyst]

Understood. And the second question is in the first wave, how much of the IBNR provisions were later reversed? Just some rough percentage as to on the health side, how much of the IBNR provisions that you took in the first -- during the first wave, how much of that was later reversed?

[Bhargav Dasgupta, MD, CEO & Executive Director]

Honestly, Vinod, I think at this point of time, I think we don't have a specific number around it. But generally, I think we can possibly put this in the context of the full year numbers, not necessarily in the context of wave 1. As we had kind of put out for the whole of the year in so far as our book is concerned, we had an impact of about INR 3.39 billion, which included all those 3 components that I spoke about, whether it is claims paid claims reserves or whether it is with respect to IBNR. As we see the intimation coming through in this particular quarter, our view is whatever we had reserved for. I think as of now, we have not completely consumed it. But we believe we are kind of quite sufficient to address any indications that could come in the subsequent period for an IBNR reserve that is outstanding as of 31st of March.

[Gopal Balachandran, CFO & Chief Risk Officer]

Vinod, If I can just add 1 more comment. It also depends on which cycle of the tail, you close the book. So if you look at last year, the peak was in September. And by March, almost everything was done. So you didn't need too much of an IBNR. And the numbers are very, very low at that point in time, the peak numbers would have all got reported and paid off, et cetera. Now in June, it's a different picture altogether. May was a peak, and June was pretty bad. So when there is so much of uncertainty, the margin that you hold for adverse deviation risk is usually higher. Now will it be released or not, only time will tell. It's very difficult for us to tell you that x percentage of that will be released. If we knew that, then we would have even had it.

[Vinod Rajamani, Asia Insurance Analyst]

Understood. I was just trying to get a sense versus the first wave. What was the -- in terms of the provisioning that you did, how much of the IBNR got released in the first wave on the health side.

[Bhargav Dasgupta, MD, CEO & Executive Director]

Yes. Yes. So that's what I said.

[Gopal Balachandran, CFO & Chief Risk Officer]

I think that's what both of us explained, that it depends on when you created the IBNR.

[Operator]

The next question is from the line of Suresh Ganapathy from Macquarie.

[Suresh Ganapathy, Head of Financial Research]

Just 2 quick questions. One is, your loss ratio of 150% plus in the health segment. What could be the industry loss ratio, if you were to just take a guestimate? Are you higher, lower than the industry?

[Gopal Balachandran, CFO & Chief Risk Officer]

We don't know that, honestly. We can only tell you the number of claims intimated for the industry, which for which there is a public data.

[Vinod Rajamani, Asia Insurance Analyst]

Okay. That's okay. Yes. Okay. And one -- okay, last question on this the reserving things. So there is no way that you can make any contingency reserve in the sense that in case you are going to see some abnormal behavior in the month of July, August, because your cutoff is 30th of June. So IBNR all reserving is done add-on 30th of June based on your estimation of what could be the incurred, but not reported and stuff. But then at the end of the day, if there is an abnormal pattern of claims in the month of July, August, September related to the history the regulator or you're -- the accounting standards don't allow you to make any contingency reserve. Have I got this correct?

[Gopal Balachandran, CFO & Chief Risk Officer]

So if you look at -- because the financials are prepared as of 30th of June. And one is expected to factor in for all actions that have taken place for the quarter to be accounted for in this particular period. So that's the reason why we also built that element of IBNR. In the normal course, one would have argued to say that I would take only claims that have been paid in the period or maybe for the matter of fact, claims that have actually been intimated and reserved for on a case-to-case basis. But over and above that, what the accounting standards and the actual principles require is to kind of estimate for the period for which the financials are drawn up also determine an element of claims that presumably has happened in that quarter, which in our case, is quarter 1 for this particular period. And however, there's a possibility that the customer could end up intimating the claim in the subsequent months. The subsequent intimations or, let's say, loss admission or a claim that has happened for a customer, let's say, in the month of July or August or September, that will be recognized as a part of Q2 financials.

[Operator]

Ladies and gentlemen, this was the last question for today. I now hand the conference over to Mr. Bhargav Dasgupta for closing comments.

[Bhargav Dasgupta, MD, CEO & Executive Director]

No, just let me close by thanking all of you for joining us in this conference. Take care of yourselves. Stay healthy, stay safe. Thank you.

[Gopal Balachandran, CFO & Chief Risk Officer]

Thank you so much.

[Operator]

Thank you. On behalf of ICICI Lombard General Insurance, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.