Motor segment drives the fall in premiums for non-life insurers

Retail health has shown a growth of 25% due to covid

The nine per cent drop in premium collection by general insurers during May was driven largely by the fall in motor and crop segments. This was the second straight month of decline in non-life premiums.

The motor segment saw a drop of 23 per cent, with the own-damage segment dropping 29 per cent and third-party segment down 19 per cent. In the first two months of FY21, premiums in the motor segment dropped 36 per cent to Rs 6,754 crore, from Rs 10,511 crore in the same period last year.

“Lack of purchase of new vehicles was among the biggest challenges. Normally, it would have been compensated for by increasing the coverage net of existing vehicles, a vast majority of which fall out of the insurance net by the third or fourth years,” said a PwC report, analysing the impact of Covid on the insurance sector.

 

 

Crop insurance, among the biggest drivers of growth for general insurers until two years ago, contracted 48 per cent. Many private insurers have either shied away from underwriting crop business or have completely stopped writing it.

On the other hand, retail health and fire saw strong growth. Premiums from retail health grew 25 per cent in May, while group health registered 3 per cent growth and government schemes saw 12 per cent growth.

Growth in retail heath was strong, on the back of increased risk aversion among customers and introduction of new dedicated Covid-19 products, said Kotak Securities in a report.

Standalone health insurers reported a strong 34 per cent YoY growth in retail health in May.

“Even as the strict lockdown has been lifted in June, the non-life insurance industry could witness a fall in the first quarter of FY21, while growth could potentially return in the second or third quarter," said CARE Ratings in a note.