Private insurance players continue to fall prey to writing the high loss-making motor business as they seek to top up their toplines, often at the expense of their bottomlines.

Over 30-50 per cent of the total business written by leading private general insurers -- Bajaj Allianz, Royal Sundaram and Tata AIG General -- has been motor.

The latest entrant -- HDFC Chubb -- is also writing maximum motor business, with it accounting for over 99 per cent of its entire premium income.

Motor insurance business is available for the taking, as India's vehicle population has crossed the 5.5 crore (55 million) mark, with 2.5 crore (25 million) vehicles added every year.

This portfolio accounts for the largest chunk of business in the general insurance sector at 35-38 per cent.

More than 42 per cent of Royal Sundaram's portfolio comes from motor, 33.7 per cent in the case of Tata AIG General, 57.9 per cent for Bajaj Allianz and 99.49 per cent for HDFC Chubb.

Few players have chosen to play it safe and take minimal exposure to this loss-making portfolio, where loss claim ratios for state players are as high as 130-200 per cent.

ICICI Lombard's motor business accounts for less than one per cent of the total premium income. For Reliance General, it is slightly higher at 3.56 per cent, Iffco-Tokio Marine at 10.97 per cent and Cholamandalam at 14.15 per cent.

However, some private companies have decided to increase business from other more profitable channels such as fire and marine.

Over 60 per cent of ICICI Lombard's and Cholamandalam's premium income come from fire insurance cover. Despite ICICI Lombard's ability to tap the captive motor business of the ICICI Group, the management consciously chose not to get into motor again.

Today, motor accounts for less than one per cent of its entire portfolio. This was not the case a year back when the sector accounted for 35-40 per cent of its insurance portfolio.

Motor insurance accounts for over 35 per cent of the state insurance industry's portfolio. Oriental Insurance Company, for instance, has mopped up over Rs 2,373.05 crore (Rs 23.73 billion) in premium income for the 10-month period up to January 2003.

Of this, over 35 per cent comes from the motor portfolio. Private players are following their public sector counterparts, as garnering motor business is easy by tying up with motor dealers.

Bajaj Allianz has also chosen to reduce its exposure to the motor business even as it has been a profitable portfolio for the company with a loss claim ratio of 70-72 per cent.

The company's chief executive officer Sam Ghosh said: "As my portfolio is skewed to motor with 57 per cent of the total premium coming from this segment as opposed to the general market, we are urging our people to reduce sale of fresh motor policies, but will continue to service existing ones."

Motor business has been a bumpy ride for all players, primarily as new players initially chose to write only new cars.

Today, they have realised that this has meant "writing claims and not writing business", as a scratch or replacement of parts spell sizable claims, anywhere in the region of Rs 800 to Rs 20,000.

Companies are looking at altering their business strategies and even state-owned insurance companies have decided to change tracks.

"We are more concerned with the bottomline and not just the topline, as our motto is to make profit in underwriting," said Rajendra Beri, chairman-cum-managing director, New India Assurance.

The state insurer has become more cautious in underwriting in all lines of businesses, including motor, he added.