Motor, health drive non-life industry growth; premiums up by 17% till Feb

With the financial year (FY23) drawing to a close, non-life insurance industry — which has been dependent on the health insurance segment since the beginning of the pandemic — is seeing other segments step up and help it deliver growth rates in the higher teens.

Till February, the non-life insurance industry, comprising general, health, and specialised PSU insurers, has seen premiums go up by about 17 per cent to Rs 2.32 trillion. According to data released by the general insurance council, health insurance premiums have grown by 24 per cent year-on-year (YoY) during this period, while motor insurance premiums have gone up by 16 per cent. These two segments make for more than 60 per cent of the non-life insurance business.

Since Covid-19 hit Indian shores, the motor insurance segment has struggled to post any meaningful growth, due to multiple reasons such as restrictions imposed by the authorities on travel, lower vehicle sales, chip shortage, etc. But gradually, this segment has seen revival in growth as all the above factors eased. However, it remains the second largest business for general insurers after health insurance. In FY22, motor insurance premiums posted a growth of about 4 per cent.

In the year prior to that, motor premiums had degrown 1.7 per cent. “Motor insurance segment has done well since pandemic fears eased. Although there is a little bit of a base effect on the growth numbers that we are seeing, overall vehicle sales have picked up, chip shortage problems have eased and this has propelled growth in motor insurance premiums. Having said that, we are seeing a slowdown in the two-wheeler segment in the rural space so we have to wait and see how the year ends,” said a senior private sector insurance executive.

Meanwhile, health insurance premiums have grown over 20 per cent so far this year, driven by retail health premiums as well as group health premiums. Data shows, retail health and group health premiums have grown 15 per cent and 27 per cent, respectively, in FY23 so far. After seeing a slight moderation, health insurance premiums have picked up again.

“On the health side, companies have raised their premiums, and consumers are opting for higher sum-assured policies, which has resulted in a good growth in overall health premiums for the industry. The momentum in the health segment is expected to continue despite the rise in premiums because the awareness level is pretty high now,” said the person quoted above. Analysts also reckon that despite a higher base and lower growth rates compared to FY22, the health segment is anticipated to witness continued demand amid increased awareness post-Covid and rationalisation of discounts.

Other segments such as fire, marine, crop, etc, have seen significant jumps in premiums. Data shows fire insurance premiums have grown over 10 per cent during April-February period, while marine insurance premiums have jumped over 22 per cent during this period. Similarly, crop insurance premiums have also seen over 10 per cent growth during this period. Experts suggested segments other than motor and health have done well because of the easing of the pandemic-related issues.

Experts believe, with the easing out of the pandemic and higher investment yields, sector profitability is anticipated to improve as the loss ratio of the health sector moderates. However, inflation and slowdown in the economy continue as risks to the growth in the sector.