The general insurance industry is set to grow by 7 to 9% in the current financial year which will be driven by health and motor insurance segments, shows a report release by ICRA.
Sahil Udani, Assistant VP & Sector head – Financial Sector Ratings, ICRA said, “We expect a 7%-9% growth in premium income in FY2022, supported by growth in health segment and uptick in motor segment.”
However, PSU insurers will grow at a slower pace than their private counterparts. “Private sector players were able to adapt to the changing business dynamics in CY2020 at a faster pace compared to the PSU players. Private sector with a relative better risk framework was able to increase the market share in fire and health segment, finds the report.
On the other hand, PSUs are expected to report premium income growth of 4-5% in FY2022 as most of the public insurers remains stretched on their solvency profile given reported losses, said Udani.
In FY 2020-21, the general insurance industry has witnessed a slowdown in growth at 4% to Rs.1.85 trillion in FY21 in terms of gross direct premium income from 14% in FY19 due to covid-19 and nationwide lockdown.
While PSU entities were slower to adjust to an online mode of growth, the reliance on physical means was higher which resulted in a 2% decline in business (Rs. 718 billion in FY21). Private players have reported 8% increase in gross direct premium income (GDPI) to Rs. 1.13 trillion last financial year.
In FY21, the health & PA (personal accident) business has seen a growth of 12%. PSU entities have reported a muted growth in FY20 (-2%) but saw a pick-up in growth in FY21 (+2%). Private sector entities have seen a growth of 16% in FY21 and 19% in FY20.
The motor insurance segment has traditionally been the biggest segment for the general insurance industry but its share has gradually declined from 46% in FY16 to 37% in FY21.
In the report, ICRA analyses the performance of 17 general insurance companies collectively representing 90% of the industry-wide gross direct premium income during the nine-month period of FY21. Of these companies analysed, four are from the public sector and 13 from the private sector.