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GIC Re, New India Assurance soar 20% in range-bound market

The general insurance industry in September grew by almost 40 per cent to Rs 19,047 crore.

SI Reporter  |  Mumbai 


Shares of general were on a roll on Wednesday. Both General Insurance Corporation of India or (Rs 258) and the (Rs 114) hit their upper circuit of 20 per cent on the BSE after a report suggested that insurance sector posted a substantial growth rate in premiums.

In comparison, the S&P BSE Sensex was up marginally by 0.01 per cent at 38,510 points at 02:37 pm. The trading volumes on both these counters jumped by more than 10-fold, as compared to an average trading volumes in the past two weeks.

According to an Indian Express report, both life and non-life insurance segments saw robust growth in terms of premiums collected at least till the six-month period ended September 30 of FY20.

The general insurance industry in September grew by almost 40 per cent to Rs 19,047 crore. The public sector insurers have mopped up a premium of Rs 8,873 crore, up 43 per cent while the private sector companies have mobilised a premium of Rs 10,174 crore, up 37 per cent during September, the newspaper reported.

With a penetration level of just 0.9 per cent of GDP, the general insurance industry has multi-year growth headroom in India. Unlike life, general insurance is non-discretionary, making it virtually indispensable. But most contracts are annually renewable and switching costs remain low.

Analysts at HDFC Securities believe competitive forces will limit profitability of the motor-line and general insurers will be conservative in releasing reserves (only with better experience), reporting limited profit growth. They also risk regulatory action on commission payouts and third-party (TP) product pricing. The brokerage firm expects this to result in a tapering of growth for motor TP after the initial spurt.

First Published: Wed, October 16 2019. 14:41 IST