General insurance industry's gross direct premium income (GDPI) is expected to grow by 10-12 per cent in the current fiscal on account of rising awareness of medical insurance and improvement in economic activity, says a report.
The GDPI of public sector (PSU) insurers is expected to grow moderately at 4-6 per cent, while private insurers are expected to capture market share by growing at a higher rate of 13-15 per cent in FY23, rating agency Icra Ratings said in a report.
The general insurance industry's GDPI to grow by 10-12 per cent in FY2023, led by higher growth in the health and commercial business segments with increasing awareness of medical insurance and uptick in economic activity, the agency said in a report.
Already the resumption of economic activity after the waning of Covid-19 infections has led to the industry's GDPI growth recovering by an estimated 11 per cent in FY2022 compared to a 4 per cent growth in FY2021.
The GDPI of private sector insurers likely grew at a faster rate of 14 per cent compared to the growth of 5 per cent witnessed by PSU insurers in FY2022, the agency's Assistant Vice President & Sector Head (Financial Sector Ratings) Sahil Udani said.
In the 11 months of FY22, the gross premium from the health segment experienced a steep Y-o-Y growth of 26 per cent, while the fire segment premium grew by 8 per cent despite partial lockdowns across the country, the report said.
Post the decline in FY2021, the motor business reported muted growth of 4 per cent in 11 months of FY22 on the lower base due to structural challenges in the automobile industry.
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"However, the GDPI from the crop business declined by 20 per cent in 11 months of FY2022 mainly due to the significant decline in the PSU business," he said.
The combined ratio across the industry deteriorated to 119 per cent in the nine months of FY2022 from 112 per cent in the year ago period with increase in health claims.
Covid claims accounted for 6 per cent of the total number of health claims paid in FY2021 and are expected to form around 11-12 per cent of the total number of health claims paid in FY2022.
The combined ratio for the industry is expected to improve in FY2023 driven by lower health claims and likely improvement in risk pricing by the insurers.
The agency expects the combined ratio for PSU insurers to improve marginally to 124-126 per cent in FY23 from 127 per cent in FY2022 supported by various cost-cutting measures directed by the Central Government and better claims performance.
However, PSU insurers are expected to continue to post net losses in FY23 with negative Return on Average Equity (RoAE), the report said.
The private players, with better risk pricing and underwriting practices, are expected to report a combined ratio of 106-108 per cent in the current fiscal with RoAE of 12-14 per cent, it said.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)