Good evening, ladies and gentlemen. A very warm welcome to the ICICI Lombard General Insurance Company Limited's Q3 and nine-month FY 2022 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, and Mr. Alok Agarwal, Executive Director, Wholesale. Please note that any statements or comments 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 the future involves risks and uncertainties which would cause results to differ materially from the current views being expressed. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. I now hand the conference over to Mr. Bhargav Dasgupta, MD and CEO, ICICI Lombard General Insurance Company Limited. Thank you, and over to you.
Thank you, Rutuja. Good evening to each one of you. Thank you for joining the earnings conference call of ICICI Lombard General Insurance Company for Q3 and nine months of FY 2022. I hope you and your colleagues and family members are all safe and healthy. I will give you a brief overview of the industry trends and developments that we've witnessed in the last few months. Post this, our CFO, Mr. Gopal Balachandran, will share the financial performance of the company for the quarter and nine months ended December 31, 2022. The data for Q3 FY 2022 indicates that the momentum in the economic activity has gained further traction, aided by expanding vaccination coverage and release of pent-up demand. Contact-intensive industries, services, and urban demand recouped on improving consumer optimism.
Amidst this, the resurgence of COVID-19 infections by way of the Omicron variant has created some sense of uncertainty, especially for service industry. While this may have some impact on the near-term growth, given the ramp-up in the vaccination program, its overall impact on the economy is expected to be lower than the first and the second wave. Moving to the GI industry, the industry during Q3 FY 2022 delivered mixed performance. Segments such as motor insurance witnessed continued headwinds due to heightened competitive intensity, chip shortages in the four-wheeler segment and weak festival demand in the two-wheeler segment. Health insurance, on the other hand, continued to show robust growth, primarily driven by group health, while growth in retail health has moderated since Q2 of this fiscal due to base effect.
As far as commercial lines are concerned, segments such as fire, marine and engineering lines witnessed strong growth in sync with the current market environment. Overall, the industry registered a growth of 11.2% in nine months of FY 2022 and a growth of 8% in Q3 of FY 2022 as per disclosures on the website of IRDAI. The combined ratio of the industry was 119.3 in H1 FY 2022, as compared to 105.6 in H1 of 2021 , based on available information from public disclosures, excluding three companies. Further, the overall combined ratio of private multi-line general insurance was 112.4 in H1 FY 2022 as compared to 103.2 in H1 2021, excluding one company. Moving to business impact this quarter.
As you know, we have been making investments to benefit from the opportunity that the current environment has to offer, especially in the retail health segment. These investments are gradually steering growth for us, thereby enabling us to gain market share in our preferred line of business. In that backdrop, of the 1,000 incremental headcount we added in our retail health agency sales force, we have rolled out offers for 800 and have successfully onboarded close to 400 of them during this quarter. As a result, we are seeing month-on-month improvement in growth and we expect the growth through this channel to accelerate in the next few quarters as the sales force starts getting productive. As indicated during our earlier calls, there was a base effect on the health benefit segment for the first three quarters of FY 2022.
From the middle of the current quarter, the base effect started to fade, as a result of which health business from our banca channels grew by 15% in December of 2021. Going ahead, we expect this channel to continue to deliver a robust growth. Our one-stop solution for all insurance and wellness needs, IL TakeCare app, has surpassed 1.1 million downloads with successful submission of over 95,000 claims and over 55,000 teleconsultation requests. Our objective is to get closer to our customers by providing a unique digital platform for continuous engagement to help them take better care of their health, motor and other risks anytime, anywhere.
As indicated in our previous earnings calls, in group health segment, our continuous direct engagement with large corporates enabled us to retain over 90% of our customers at a higher price, thereby improving premium per life since June 2021. The underlying environment suggests that the consumers are willing to pay a higher premium for better coverage and adopt technology for better customer service, thus creating an opportunity for us to grow in this segment. In motor, we continue to combat challenges from the lack of motor TP rate hike for over two consecutive years, heightened competitive intensity in the motor OD segment, chip shortages in the new private car sales, et cetera. However, our expectation is that these are short-term challenges.
When we take a closer look on the ground on the private car side, the consumer sentiment remains strong. During the quarter, we've continued to focus on growing our market share in certain key profitable subsegments. As far as the commercial lines are concerned, we have seen strong growth and believe we are in that environment now where growth will continue. In current times, major trend has been the significant increase in online buying by consumers. At ICICI Lombard, we have been continuously investing in this front. Our Digital One team is set up like a full stack InsurTech firm consisting of experts across functions operating together like a fully functional entity within the overall organizational framework. Business sourced through our website increased by 20% in Q3 FY 2022.
Within this, our health business grew by 22.9%, travel business grew by 156.9%, and motor business grew by 11.9%. Business sourced by this team through strategic alliance partners in the digital ecosystem grew by 70% in Q3 of FY 2022. Our Digital One business is fully empowered to deep mine customer data and fine-tune customer outreach efforts, service customers through claim systems that enable real-time communication and thereby optimize cost of acquisition. We are excited on the progress of this channel and believe it is all set to drive benefit from the longer- term opportunity the current environment is offering us. Overall, our focus on sustainable market leadership continued through the third quarter as we prioritize underwriting discipline, portfolio optimization, and growing in segments that are favorable and fall within our risk appetite.
We remain on track and are focused on growth levers such as strengthening our distribution engine, aided by lower base effect, realizing synergies, rationalizing costs while scaling up our preferred lines of business, servicing customers with excellence, digital advancements that will enable us to sustain the return on equity objective over longer- term. I will now request Gopal to take you through the financial numbers for the recently concluded quarter.
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 Q3 and nine months FY 2022. We have put up the results presentation on our website. You can access it as we walk you through the performance numbers. The effect of the demerger in the financials has been incorporated in the form of opening net worth as on April 1, 2021. Further, the financials for the current year represent numbers of the merged entity, and the comparative numbers for the previous year in the financials pertain to standalone ICICI Lombard, and hence they are not comparable. Gross direct premium income of the company was at INR 133.11 billion in nine months FY 2022 as against INR 105.25 billion in nine months FY 2021.
The industry reported a double-digit growth of 11.2% on a lower base for a similar period. Our GDPI growth was primarily driven by growth in preferred segments, given that our approach has always been growing business sustainably. The fire segment GDPI was INR 22 billion in nine months FY 2022 as against INR 17.48 billion in nine months FY 2021. As indicated in our results presentation, the overall GDPI of our property and casualty segment was INR 39.34 billion in nine months FY 2022 as against INR 30.61 billion in nine months FY 2021. On the retail side of the business, GDPI of the motor segment was INR 58.15 billion in nine months FY 2022 as against INR 51.48 billion in nine months FY 2021.
To harness the potential of these segments, we have been expanding our distribution network to increase penetration in Tier 3 and Tier 4 cities. Our agents, including the point of sale distribution, increased to 81,969 as on December 31, 2021, up from 78,035 as on September 30, 2021. The advance premium was INR 34.59 billion as at December 31st, 2021, as against INR 36.86 billion as at September 30, 2021. Resultantly, combined ratio was 111% in nine months FY 2022 as against 99.1% in nine months FY 2021 and 114.3% in H1 FY 2022.
Combined ratio was 104.5% in quarter three FY 2022 as against 97.9% in quarter three FY 2021 and 105.3% in quarter two FY 2022. Our investment assets rose to INR 374.54 billion at December 31st, 2021, up from INR 371.95 billion at September 30, 2021. Our investment leverage net of borrowings was 4.23x at December 31, 2021, compared to 4.27x at September 30, 2021. Investment income was at INR 22.95 billion in nine months FY 2022 as against INR 16.59 billion in nine months FY 2021.
On a quarterly basis, investment income was at INR 6.9 billion in quarter three FY 2022 as against INR 5.68 billion in quarter three FY 2021. Our capital gains was at INR 6.01 billion in nine months FY 2022 as against INR 2.92 billion in nine months FY 2021. Capital gains in quarter three FY 2022 was at INR 1.31 billion as against INR 1.08 billion in quarter three FY 2021. The expenses incurred of approximately INR 0.16 billion on account of the demerger has been absorbed in the P&L during nine months FY 2022. As indicated in our previous earnings call, during the integration process, we were able to smoothly transition and onboard our partners to seamlessly operate with minimal disruption.
Our branch network as at December 31, 2021, stood at 285 as against 431 as at September 30, 2021. Apart from the immediate benefit, this transaction entails an opportunity to unlock significant operational and revenue synergies in times to come. We are on the right path on our roadmap of realizing the synergy benefits by the second half of FY 2023. Our profit before tax was INR 12.73 billion in nine months FY 2022 as against INR 15.04 billion nine months FY 2021, whereas profit before tax was INR 4.21 billion in quarter three FY 2022 as against INR 4.18 billion in quarter three last year.
Consequently, profit after tax was INR 9.59 billion in nine months FY 2022 as against INR 11.27 billion in nine months FY 2021. Profit after tax for this quarter three stood at INR 3.18 billion as compared to INR 3.314 billion in quarter three FY 2021. Return on average equity was 15.1% in nine months FY 2022 as against 22.4% in nine months FY 2021. The return on average equity for quarter three FY 2022 was 14.6% as against 17.6% in quarter three FY 2021. Solvency ratio was at 2.45x as of December 31, 2021 as against 2.49x as of September 30, 2021. It continued to be higher than the minimum regulatory requirement of 1.5x .
As I conclude, I would like to reiterate we continue to stay focused on profitable growth, sustainable value creation and safeguarding interest of policyholders at all times. I would like to thank you all for attending our earnings conference call, and we would be happy to take any questions that you may have. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.
Thank you for the opportunity, sir. I have couple of questions. First, on the motor side, sir, if you could throw some light on the reason for the underwriting for this business, is it because of any kind of mix change after amalgamation with Bharti AXA, or any other driver of the same?
Swarnabha, you know, on the motor side, as we've been saying, the underlying challenge is more in terms of the distribution aggression that we are seeing on the ground. It's not to do with the merger. On the merger front, actually we are quite happy with the way things are progressing. Except for, as we had earlier said, three or four OEM dealerships, we've actually got complete synergy in terms of benefiting from that distribution channel. We are also, you know, seeing growth across most of the agency and the other distribution channels that we've, you know, acquired through the Bharti AXA integration.
The real challenge on the ground has been, you know, we've always found that whenever the growth slows down in the market because of, you know, because of various pressures. Right now we have a challenge in the market because of chip shortage for private car, because of online demand for two-wheelers. Overall the industry is not growing as fast as it is used to, the motor insurance industry. Whenever such situations happen, we find that the market, as in our industry, gets very aggressive on sourcing. That's the real reason why the motor book is underperforming. If you look at the largely that's from the cost side. On the loss ratio side, it's also because of the fact that the claims frequency has now gone back to normal.
First two quarters, we had some benefits because of relatively, you know, slower utilization or lower utilization because of some lockdowns, you know, across the country. That went away in Q3. The loss ratios have climbed back up to what we believe is more normal. Those are the real reasons that we are seeing. It's more underlying industry issues and, you know, within that our experience rather than any rather than the merger.
Sir, if I look ahead on the motor side, basically you have commented that, you know, you have seen some green shoots in certain segments. In previous calls you had mentioned that. What would be the trends now because I think these kind of challenges are continuing for quite some time, especially competitive intensity. Are you seeing situations improving and what is the status in terms of, you know, you had talked about price increases also in certain segments earlier?
Yeah. What we have been saying that we don't expect that to happen, or at least our experience tells us that should happen from next year. We don't expect anything this year, as we've been saying. There are two components on the price increase. One is the third-party price increase that is more tariff and regulatory driven. Again, we believe that the industry needs a tariff price increase, but that is, as I said, you know, driven by the regulators. We can't, we don't control that. Two years we've not seen a price increase. We are hopeful that this year we'll see one. On the OD side is more where we have greater control as an industry.
I said, I think the industry benefited a bit from the first quarter because of lower usage and that's a benefit that people probably have factored in in terms of the aggression. We've been saying that we don't expect a price correction this year, but we are hoping that we should see that you know from next year onwards. Historically, we've never seen you know two to three years of price aggression. In these two years, we've seen two COVID lockdowns. That has probably been the reason why this has sustained for this longer period. From our perspective, I believe we've kind of you know done most of the corrections that we wanted to. On this base we are reasonably confident that we'll start growing from the coming quarter onwards.
Okay. That's very helpful, sir. Additionally on the-
Sorry to interrupt you, sir. May I request to please rejoin the queue? We have participants waiting for you.
Sure. I'll join back. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Abhishek Saraf from Jefferies. Please go ahead.
Hi. Thanks for the opportunity. Happy New Year to Bhargav and Gopal. I had two questions. Abhishek, we can't understand what you're saying. Voice is cracking. Sorry, is this better now? It's better now. Yeah. Sorry about that. First of all, Happy New Year to Bhargav and Gopal. I had a question with regard to retention. It appears that this quarter we have had a higher retention at around 76% versus what was there in the previous two quarters of this year, around 66%, 60% and 68%. What explains this stance? Which category have we seen higher retention? And is it driven by the reinsurer or we are doing it on our own volition? That's the first question.
Second, I noticed that our investment yield, both on the policyholder investments or shareholder investments, have actually come down, quarter-on-quarter, while the yield curve or the rates have generally been on an upward trajectory. If you can just help me understand what has happened there also, it will be very helpful. Thanks a lot.
I'll ask Gopal to take the first one. It's largely due to the mix of business. There's no change in yield. Gopal will explain it. With regard to the second one, in terms of the investment yield, the aggregate yield could be driven a little bit by the mix of capital gains that we have. Overall, the book is earning roughly about 7%.
When interest rates go up, our mark-to-market benefit that we are sitting on the bond book, that goes away. Equally, the new flow that we get into the investment portfolio, that earns a higher return. Now, given the overall mix of the new flow versus the old stock, the new flow impact is very little because it takes some time for related to the overall size of the book, which is INR 38,000 crores, the new flow will be much smaller. So you don't see that impact too soon. While you see the impact of the mark-to-market benefit of the bond book going away. Anyway, bond book for us more or less has been kind of a more of an HTM strategy, so we don't see a problem with that.
As the mix of the book changes with a greater flow coming in, the increased yield, you know, starts benefiting us. On the reinsurance, I'll ask Gopal to answer the question.
Yeah. Abhishek, Happy New Year to you as well. I think on the retention side, no, as Bhargav said, there is no specific change in the retention philosophy. That pretty much kind of remains the same. It's just that what you see in quarter one, typically you end up seeing a lot of corporate renewals happening, where relatively the proportion of reinsurance is higher and retention is, to that extent, slightly lower. Whereas in quarter two, I think if you recollect what we have been saying, a consequence to the demerger, we have also kind of inherited the crop book that Bharti AXA had already kind of committed to. That book is something that got booked in quarter two, and which is why you see a relatively lower retention for quarter two.
Quarter three is typically the period where you actually see a large part of the business being underwritten on the retail franchise, predominantly motor and health, where in line with what we have mentioned, no change in the retention philosophy. Typically, these are small-ticket policies where our retentions are relatively higher. Otherwise, at an aggregate basis, no change in our retention philosophy as such. It is purely a function of what kind of mix of business that we have underwritten in Q1 and Q2.
Sure. Thanks, Gopal. Thanks, Bhargav. Quite clear. Basically one can then probably going forward build in that these kind of thing in the retention or reinsurance percentages would be broadly in line with the mix of that particular quarter. Just one thing if I can ask on COVID claims for this quarter. If you can share, Gopal, that data, how were the net COVID claims for us this quarter? And I believe that last quarter we mentioned that we could see some reserve release also. So what has been the trend there on COVID claims in this quarter? If you can just throw some light on that.
Abhishek, if you recollect, what we had talked about was for the first half of the year, we had
Yeah.
COVID claims were roughly about INR 5.61 billion. Now that number, if you look at on a nine-month basis, stands revised at about INR 5.29 billion. Hence to that extent, while in line with what we are seeing as let's say declining trend on the wave two related COVID cases, obviously in relative to the approach of reserving that we had kind of built in in quarter one, as I said, nine-month number stands at about INR 5.29 billion. Having said that, I think what will be important for us to kind of watch for, which is what we will do in quarter four, is this wave three impact that has started to kind of play out.
Obviously, early trends in terms of the number of cashless intimations that we are seeing tends to be slightly, maybe lower than the peak what we had seen in wave two. Having said that, obviously we will monitor the development of intimations because these are cashless requests. Honestly, we'll have to wait for in case if there are any reimbursement claims that gets intimated, which typically happens at a lag. On the wave two related COVID impact, I think as I said, nine-month number stands at about 5.29.
Yes. Got it. That's it. Thank you.
Thank you. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Thanks for the opportunity, sir. How should we think about combined ratio and ROE going forward, given that it was a pretty normal quarter from a claims ratio perspective, and our combined ratio is around 105% for the quarter. How should we think about combined ratio over next coming year? Also we expect some synergy benefit to play out on the operating costs. Should we expect this number to trend towards 100% over the next couple of years?
Yeah, Nidhesh, as we've been saying, we believe that, you know, as you know, the consolidation effectively happened in the last month of last quarter. We've started taking most of the calls that we need to take in terms of the synergy benefit at the cost side. On the revenue side, as I explained, we are quite happy with the way things are, they are playing out in terms of the synergy with the existing distribution that, you know, the Bharti team had already built and we are seeing growth coming through in some of those partnerships as well. The entire benefit for this, as we've been saying, will take some time.
Our sense is that we will start to see the benefit play out maybe by, you know, we have been saying FY 2024, but we think it'll probably be a bit, earlier than that. You know, the second half of next year we'll start seeing that benefit. Now, if you look at the combined, you know, on a pro forma basis, Bharti pre-deal announcement and ICICI Lombard pre-deal announcement, if you look at pro forma integration, that would have been about 104 combined. The question is how soon can we bring that down? Now, today what the situation is that the core online business of ICICI Lombard is also not at, you know, the 700 number that we used to experience because of all the pressures that we've talked about.
It may be, you know, challenging to bring it under 100 that we have seen in the past, but directionally it will start coming down. In terms of the synergies, maybe Gopal can explain some of the work that has already happened.
Yeah, Nidhesh, I think, I mean, we have been kind of talking about broadly three areas of synergy, right? I think in line with just to kind of refresh, I think tax synergies is something that, I mean, as we file, we will be filing the returns of 2021 by January 31st. We will, in line with what we have said earlier, we will be able to absorb the full benefit of the carry forward losses. On the cost front, I think as a part of our opening remarks, which is what we kind of put out, I think we have looked at the overall office infrastructure.
Clearly, I think we have been able to kind of keeping in mind the policyholder interest, we have been able to kind of look at what kind of existence do we need to have so far as physical offices are concerned. Clearly the numbers as at 31st December, the number of office networks stands revised at about 285. Again, given the fact that this rationalization of the office infrastructure has happened in quarter three and more towards the latter part of the quarter, you will again start to see some benefit of the synergies in the form of cost playing through from Q4 onwards.
Equally, I think, we have been kind of looking at various areas of productivity improvements and efficiencies, which is what we have kind of indicated in the earlier call to play out over the next six to nine months. There again, we are on course in order to be able to realize better improvement in productivity when we look at the other cost elements. The final cost element in terms of technology related spends, where again, we will be able to kind of see benefits on synergy playing out. That will take some time because over the next nine-12 months is when we will be able to significantly migrate even let's say historical data and other related information.
The impact of technology related spend on the synergy front will start to play through most probably towards the second half of the next financial year. Otherwise on course to kind of realize most of the cost elements that we have talked about and the revenue synergies, as Bhargav explained, is something that we will again start to realize towards the second half of the next financial year.
Sure, sure. Secondly, across financial service segments, we keep on hearing noises around disruption. We are seeing significant disruption in some of the segments that's working. In our industry also, a lot of new age companies are coming up. In terms of distribution there is new age company coming up and the new age model which are coming up in entire manufacturing side and the general insurance. Some of these business model have also succeeded outside India. How do we think about from a long- term perspective with respect to these possibility of disruption to our business?
Yeah. You know, I think we've been discussing this pretty regularly. You know, if you look at the scope for disruption, there are both in terms of InsurTech, the way people source policies, way people service policies, way people service claims. There is tremendous scope for disruption, again, using digital tools that are now available. Similarly, there is also some amount of disruption that is possible in the distribution side. If you look at what we've been doing is that on the first in terms of sourcing policies or servicing policies through modern day technology, that's been an area that we've been investing heavily.
Our approach on the business side has been as we, you know, mentioned in the opening statement, focus was to create a carve out team which focuses on the digital disruption on the customer acquisition side. We call it our Digital One team, where we've kind of created a team which is self-contained with, you know, all key capabilities, you know, and with separate, you know, locations, separate philosophies in terms of even people, you know, processes. That team has been ramping up and we are quite happy with the way the team is growing business, both in terms of tying up with digital ecosystem partners.
As I explained, this quarter we've seen a 70% growth in that business. Also in terms of the business that gets written on our website, we've seen about 20% growth in this quarter on business written on our website. Now, the other thing that we have to study is you know, honestly speaking, the fact that some of these players are willing to lose a lot of money for growth, we have to be a bit more calibrated than some of them. Obviously our philosophy has always been to build a sustainable model. We may not want to go to the level of losses that some of them incur.
Even without that, we are reasonably confident that we will be able to grow the segment quite fast. Toward that, we are also, you know, toward this end of this quarter, we've taken a fair amount of calls, and we believe that will reflect in even faster growth in this channel going ahead. On the claim side, we've been giving out some numbers, you know, in terms of digital claim settlement that we've seen both for motor and health using AI, ML, et cetera. Those numbers are increasing by the quarter. Even this quarter, we have a significant increase in the claims that we processed through our InstaSpect service and also the cashless operation that we gave using our ML feature.
Similarly for us, in terms of the initiative on the IL TakeCare side, that's the way we believe we will be able to engage with customers even better, on a web-based platform or a mobile apps rather, and build a greater connect while providing the usual insurance services. There, the focus is not just in terms of the usual things that, you know, insurance companies provide, but a lot more, you know, services and features which increase, you know, engagement and potentially reduces risk for our customers. This is a big thrust area for us, you know, in terms of the digital disruption.
Sorry to interrupt. May I request Mr. Jain to please rejoin the queue? We have participants waiting there to return. Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.
Hi. Thank you. Thank you for the opportunity. Hi, sir. Wanted to ask you a question. If I see the third quarter growth numbers for Lombard and including AXA, Bharti AXA in the base. There has been a 4% contraction for this quarter for the combined entity, while the industry or the private players were at around 5%-8%. Now, motor we can see has degrown much more, 12%-13% for the combined entity, while the private players have still grown around 6%. On the health side, again, Lombard consolidated books is around 3% growth for third quarter, while the industry and the private players are significantly higher. Sir, if you can give us some understanding of how do you plan, what is your growth target?
If not target, but how do you plan your growth across these two segments because these are your largest segments basically? What should we expect for the coming year or for the coming quarters on the growth side?
Yeah. Shreya, let me take the two segments separately. Let me start with motor. So if you look at some of the commentary that we've given on the motor side, if you look at the three subsegments, the private car, you know, two-wheeler and commercial vehicles, we are a bigger player in terms of the private car subsegment and even a bigger player when you look at the share of new. Our share of new is much higher than our normal share of business as a company. At a time when the new sales have been muted for reasons that all of us are aware, largely to do with the chip-shortage issues rather than demand issues, that has had a higher impact on us than maybe the overall industry.
Similarly, if you look at our mix of business, two-wheelers for us is a much higher mix of business. We have roughly about 26%-27% of our motor mix coming from two-wheeler. Industry mix would be about roughly about 15%. Now, two-wheeler slowdown has hence affected us a bit more. We've, you know, from a market share perspective, we are fine within that segment, but from a mix perspective, our, you know, growth gets affected when two-wheeler slows down. On the commercial vehicle side, there has been a growth. Again, you know, while for the industry commercial vehicles is roughly about 40%-45%, for us it's about 17% now. So when that segment grows faster than the others, then relatively we underperform. Having said that, there's also the pricing aggression point that we've been making.
Our sense is that most of the calls that we wanted to take in terms of correcting the portfolio has happened, and we remain optimistic about growing or outgrowing the market from the coming quarters onwards on the motor segment. On the health, again, this is unfortunately a bit of a base effect because we were traditionally more of a banker player, and there was a base effect in terms of ICICI Bank stopping to distribute, you know, our benefit products. That had some amount of impact on our overall business. Separate from that, now we are seeing that growth come back.
As I explained, if you look at even during the quarter, you know, while overall number is, you have rightly amplified that the health business has, you know, undergrown for the quarter. If you look at just the month of December, we've outgrown the market on the health, retail health indemnity business as we are adding more agents and distribution that we've talked about. Similarly with the bank, the base effect is largely paid out, played out, and our overall bancassurance distribution in the month of December has grown by about 15% because the base effect has got played out. We are optimistic that this will start growing from this quarter onwards. Even the bank has restarted you know selling not benefit but our indemnity product as an attachment, just started.
We'll have to wait to see the impact. It may take a bit of time. Overall, I think the base effect headwinds are behind us. On top of it, we are investing in terms of the retail agency distribution that we've talked about. All in all, we are quite optimistic about our growth from going forward.
Got it. Sir, also wanted to ask you, particularly on your health business, your group business is a bigger portion of your health portfolio. Sir, is there any target you are putting on what kind of mix you want to maintain between retail and group in the health portfolio?
We don't. We take calls based on pure, you know, risk selection. I mean, if let's say, group health business's performance is poorer, we will cut down on group health business. What we are very happy with is what we've been saying for some time, from June onwards, after the wave two, we went back to our corporate clients for price correction. You know, obviously from prospective perspective, not for the bank book. We said we will look at 50%-20% price increase. We are very happy to say that for large corporates, we've got a even higher price increase on a overall portfolio basis on a per life premium.
We factored in the potential, you know, some potential third wave also in that price, and we are quite happy that we've retained more than 90% of our large corporate accounts in spite of this kind of a price increase. With this, we are reasonably confident about the group health book right now. We'll have to watch for the impact of COVID wave three and the system pricing. We don't put a target of mix. We put a target of profitability for each of the segments.
Sorry to interrupt. May I request Ms. Shreya to please rejoin the queue, ma'am?
Yeah, sure. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your question to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Rahul Jha from Bay Capital. Please go ahead.
Hello.
Yes, Mr. Jha.
Yeah, hi.
Please go ahead with your question.
Hi, Bhargav and Gopal. Happy New Year to you. My question is, you said that there were around 400 kind of agents adding the retail health side. When I look at the numbers, it is from 78,000, it has gone to 82,000. This is how come only 400 in the retail health? Only 10% is going into retail health?
Yeah. First, again, Happy New Year to you, too. The 400 number is our own sales force that we hire on our rolls. The number that you are talking about is the agent count. What we do is, these people join our company and then they recruit agents who are not on our roll. These are commission agents, tied agents or point of sale agents. These are two different numbers. When we get these 400-odd people, as we mentioned, in the second earnings conference call, we wanted to recruit about 1,000, or we want to add about 1,000 sales force in the retail agency channel. These are people that will take on rolls.
Each of them will then go out and hire agents to do the distribution. 400 of them have joined this quarter, then they will now go out and you know, hire more agents and they, those agents will then produce business on this ground.
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah. Hi, Happy New Year, everyone. What was your health loss ratio in the quarter? You know, last previous quarter, we had some INR 67 crore of reserve release on the health book. In a like-to-like comparison, what would have been the claims ratio? Second on the motor TP price hike, where are the timelines? Is IRDAI talking about it, or what are the processes that are needed for the price hike, and has anything been started from IRDAI side?
Yeah. Let me take the first part first. Prayesh, on the first one, on the health loss ratio, I think when you look at the investor deck, we have put out the numbers, which includes health and accident put together. Just on the health side, if you were to look at quarter two loss ratios for the overall health book was 77.7%. Quarter three, that number stands at about 82.7%. If you look at quarter three last year, which is for ICICI Lombard on a standalone basis, the overall health loss ratio stands at about 88.1%. Those are three numbers. Q2, 77.7, Q3 of current year, 82.7, and Q3 of last year, IL on a standalone basis at 88.1%.
Those are three numbers. That's in response to the first question of yours. Your second point on the release of reserve that we had seen in quarter two, which is what I kind of talked about. For the first half, we had a net COVID impact of about INR 5.61 billion. That's for the first half of the year. That number, if you look at on a nine-month basis, now stands revised at about INR 5.29 billion.
Hence, to that extent, I think relative to the trend line, what we are seeing on account of wave two COVID-19 cases, I think the numbers stand revised at about 5.29. As I mentioned, I think obviously what we'll have to wait for is this new wave three that has come through. What impact does this have both in terms of count of intimations and too, in terms of average claim size? I think as we move forward in this quarter, I think we will be able to give a better insights subsequently. The initial trend seems to suggest when we look at the cashless count in terms of intimations on wave three, relative to the peak that we had seen in wave two, the number of intimations under wave three seems to be far lower.
That's one trend line, but early trends, we will have to wait, as I said, for more data to come through. Even on the claim size, as we speak, maybe it looks like things, the cases that are getting intimated are relatively milder and hence, to that extent, maybe a 10%-15% lower average claim size than what we would have normally seen in a relative quarter. That's what early trends are. Obviously, we'll have to wait for further intimations as and when we get those intimations. That's one. To your second point on motor third party, I think we have been talking about the price increase. Unfortunately, we have not seen a price change happening over the last couple of years.
Having said that, I think we have also been talking about, let's say, increase in fact the average claim payouts consequent to various court judgments that we have seen over the last couple of years. The expectation that we have is maybe as we head into, let's say maybe FY 2023, hopefully we should be able to see some form of a draft guideline getting put out in terms of increasing motor third party pricing.
Thank you. The next question is from the line of Sanketh Godha from Spark Capital. Please go ahead.
Yeah. Thank you. Thank you for the opportunity. Gopal, we have seen a significant increase in the OpEx on a quarter-on-quarter basis. If you see, the sales, promotional, and advertising spend has increased almost by 28% QoQ. Just want to understand why it has gone up, given it's a combined entity. We thought this number will come down compared to what you have done in second quarter. Also just wanted to understand this cost synergy part itself.
If there are low hanging fruit like branch rationalization and the employee rationalization, then what is the likely absolute cost you could be saving during FY 2023 and FY 2024 so that your OpEx ratios from Bharti AXA could substantially improve in 2023 and 2024 compared to what we are seeing right now. Sorry, 30% is what we are seeing right now for the combined entity Bharti AXA commission.
Yeah. Maybe, Sanketh, to your first question on the sales promotion front, I think maybe you have to always look at the overall expense ratios number in the context of the mix of business that we have. I think as I kind of mentioned in one of the responses to the earlier question, Q3 typically happens to be the period where we see typically bulk of the retail business getting sourced. For example, the mix of motor within, let's say, whatever volumes of business that you would have done in, let's say Q2 and Q3, you will find motor contributing to a relatively larger proportion of gross written premiums. Hence to that extent, correspondingly is where you will get to see the cost of sourcing getting reflected in so far as expense numbers are concerned.
Having said that, I think when you look at the aggregate expense ratio numbers for quarter two, that number was at about 35.4%. This I am talking about both operating expenses plus commissions put together. For quarter two, that number was about 35.4%. That number is actually kind of slightly come off, and that number stands at about 34.9%. Hence, to that extent, we have actually seen maybe a 0.5% improvement in the overall management expense ratios in quarter three compared to quarter two. That's the trend line that one would obviously want to kind of see as we kind of head into the subsequent quarters.
Your point on, let's say some of the cost synergies getting played out, which is what we explained, your point is absolutely right. On the office infrastructure space is what I, again, responded to one of the earlier questions. If you look at December 31, our office number stands revised at about 285, as compared to almost more than 400+ offices which we had towards the end of September. We have clearly been able to kind of get benefits of rationalization on the office space. A large part of it happened towards the second half of Q3, and hence to that extent, the impact in the form of benefits on cost is something that you will start to see it playing through in the Q4 number onwards.
The same thing is what we would obviously also want to see improvement in efficiencies and productivity playing out even when it comes to on the people side. Again, the impact of which is something that we will see over the next, I would say six-12 months kind of time period. The trajectory that one would take is what I think Bhargav also responded in so far as the combined ratio is concerned. Again, when you look at quarter two combined, we were at about 105.3. Quarter three, we see these numbers have come to 104.5. Over the period, I would obviously want to try and see if we can start seeing improvement in combined as we head into the subsequent quarters. That's how the cost synergies would play out.
Every cost element is being looked at and some of the immediate benefits is something that we already started to see. Certain elements of cost, particularly as I said on the tech side, will play through towards the second half of the FY 2023.
Thank you. Ladies and gentlemen, you are requested to please limit your question to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead.
Yeah, hi, good evening. Just two questions. One, firstly, on that, you know, your retail health claims ratio seems to be on the higher side in Q3, despite some INR 30-odd crore of, you know, COVID reserve releases, adjustment. So was it sort of due to increase in frequency of non-COVID or delayed procedures? Or was there some sort of a change on the, you know, severity side? So that's on the retail health part. Secondly, on the motor side, now we have talked a lot about competition. Bhargav told that, okay, rarely it has happened that two-three years of intense competition.
One thing that's different in this time of competition is that there are a lot of new players like, they have been funded or being funded on the patterns of, you know, the futuristic, InsurTech business, where sort of, you know, the willingness to take losses is pretty high for longer period. On the other hand, you have large incumbents struggling to just maintain their top line. Of course, they have been recapitalized, so their ability again to drag, you know, the pricing is better, I mean, at least higher this time. These are two questions. How do you see the—I mean, motor only competition reaching out?
No, Avinash, great questions. On the first one, it was largely because of elevated frequency of non-COVID claims that we see. We've been talking about it. In Q3, we had both medical acute cases, which is basically the dengue, malaria cases, which kind of, you know, kind of continued from Q2. Usually it's linked to the monsoon season. It continued in the early part of Q3. Separately, on top of that, the elective surgery numbers have been quite high for Q3. Early signs in Q4, both those are, you know, medical acute cases came down in the second half of Q3 and even elective surgeries right now is again trending down, but we'll have to watch this trend for a period.
In terms of ACS, very similar to the number that we gave in the last earnings call. Over a two-year period, we've seen roughly about 20% increase, so about 9%-10% annualized increase in average claim size is what we are seeing on the, which is largely a medical inflation that we are seeing. We will have to again wait to see if this is structural. We explained the reason why we think this is happening in terms of additional tests, PPE suits, et cetera. You know, till COVID plays through, this will remain and then, you know, and thereafter we'll have to wait to see if this is structural. That's on the health side. On the motor side, you know, your point is absolutely valid.
In the past we've not seen kind of a pre-funded entity which is just going for growth. We've had disciplined, you know, insurers who've come into the market. That risk is there. Having said that, we believe that, from our perspective, we've taken the necessary calls that we wanted to this year, and we are reasonably confident that on this base we'll continue to grow on the motor book. I'm hoping that there will be some price correction next year because of TP, et cetera. Even otherwise we've kind of geared up to handle the sector. We've done a lot of granular analysis during this year to prepare ourselves for a situation where, you know, this market continues to remain aggressive, and we will still be able to compete with our terms.
Thank you. The next question is from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead.
Yeah. Thanks for the opportunity. Now, Bhargav, you mentioned about, you know, the app downloads, 1.1 million. You know, are we happy with this number? Can you share some customer experiences? Because, you know, the app has certain very good features like a consultation or a diet planning. You know, how has the customer experience been? Because, you know, some of these things once, you know, they are appreciated and kick in automatically, you know, stickiness and cross-sell can improve for us. You know, in dental insurance there were some tie ups. Is it, you know, under the same policy or, you know, some of these initiatives for creating a more differentiation at our retail level kind of focus which you have-
No, you're absolutely correct. You know, this is exactly our thought process on the benefit of the app from a longer- term perspective. If you look at the number, 1.1 million is just scratching the surface. We launched this app about two years back, largely focused on the business to employee segment, which is basically the group health segment for employees of corporates. At that point in time, our thought process was this was a segment where, with whom we had hardly any engagement. Individuals in corporates wouldn't even realize that the insurance was from ICICI Lombard unless they had a claim. You know, a small percentage of people actually claim. The whole thought process was to build engagement.
Very rapidly we realized that we needed to pivot and provide, you know, a comprehensive, you know, solution across product lines to these customers because the same customer who was an employee of a corporate is also a retail, you know, insurance customer of ours through maybe a motor or some other policy. We've been consistently pivoting and, you know, or we pivoted and we've been consistently building features on an agile mode. Every 16 days we launch new features on that app. The number of downloads that we are seeing is really a two-year story. Right now, we are adding almost 100,000 new app users every month. On the service and the engagement, we are watching it like a hawk.
There is, you know, we believe you're absolutely right. We believe this will create stickiness and improve cross-sell. We launched the renewal and the cross-sell, you know, upsell module in the middle of this year, around June or July or August, if I recollect. Month-on-month, we are seeing good traction in terms of people using the app for upselling or cross-selling, but on a very small base, so the numbers are not meaningful in the overall scheme of things. The growth numbers are quite phenomenal. We'll wait for some time before the numbers become meaningful to talk about some of these is my guess.
Overall, we are very clear that this is going to be a tool to, you know, build a strong engagement with our customers, which will in the long- term help us with cross-sell, upsell, you know, and we believe even loss ratio.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Bhargav Dasgupta for closing comments.
Thank you, Rutuja. You know, again, thank you everyone for joining this call. You know, we are available for answering any other call separately. Feel free to reach out in case you had a question and time didn't permit us to answer those then. Look forward to engaging you during the quarter and thereafter. Thank you and take care. Bye.
Thank you so much.
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.