Motor insurance picked up pace, grew neck and neck with health in H1FY23

Motor insurance premiums, riding on higher vehicle sales and repricing of third-party premiums, has compensated for the normalization of growth in the health segment. This comes despite health insurance premiums moderating in the first half of the financial year (H1FY23).

The non-life insurance industry’s growth, though, moderated to 15 per cent from over 20 per cent growth in Q1FY23.

According to data released by the General Insurance Council, health insurance premiums logged an 18.9 per cent year-on-year (YoY) growth in H1FY23, compared to 28.8 per cent in the same period last year. On the other hand, motor insurance has continued to grow neck-to-neck with health, reporting a growth rate of 18.9 per cent, compared to just 5 per cent growth in the year-ago period.

In FY22, motor insurance premiums reported just 4 per cent growth over the previous year whereas health premiums posted a growth of over 25 per cent.

During the pandemic, health insurance premiums drove growth in the general insurance industry. However, as cases continue to decline, growth in the health segment has normalized, which is largely on expected lines.

Within the health segment, retail health, although growing at a decent pace of over 14 per cent YoY, has lost some steam from the pandemic years. In the same period last year, retail health reported a growth of over 17 per cent.

The group health segment has been driving growth in the health category as medical inflation and higher claims have resulted in a rise in premiums in this segment. The group health segment now constitutes over 53 per cent of the health insurance business, followed by retail health at 36 per cent, government schemes at a little over 9.5 per cent, and overseas medical at 1.3 per cent.

Despite moderation in growth, experts believe demand for health insurance will continue, albeit not at the level witnessed during the pandemic. “Despite a higher base, the health segment is anticipated to witness continued demand amid increased awareness post-Covid,” said CareEdge in a report.

Motor insurance, which saw muted growth in the last two years, has finally seen some momentum, although the base is low. In H1FY23, motor ownners’ damage premiums grew 19.7 per cent and third-party premiums grew 18.3 per cent. “The growth can be attributed to last year’s low base, the repricing of motor third-party rates and higher vehicle sales,” the rating agency said.

That said, health insurance continues to be the biggest business in the non-life industry. As of H1FY23, health premiums constitute 35 per cent of the non-life insurance industry, followed by motor premiums with 27.86 per cent.