Non-life insurers’ gross direct premium up 19.5% in January: Report

NEW DELHI: Collective gross direct premium underwritten for non-life insurance companies grew 19.5% year-on-year (YoY) to ₹25,541.8 crore in January from ₹21,382.9 crore a year ago, data shared by CareEdge ratings showed.

“The non-life insurance industry reported double-digit growth for the month of January 2023, continuing the FY23 trend except for a blip in September 2022. The industry reached ₹25,541.8 crore for January 2023, a 19.5% growth y-o-y," the report said.

So far this year, the industry has grown 16.6%, compared to 11.6% in the same period last year. This growth has continued to be driven by health (especially the group segment), and motor insurance.

“General Insurers’ January 2023 numbers were up by 23.8%, compared to an anaemic increase of 2.3% in January 2022, while for YTD FY23, the growth which has been driven by the group health and motor segments, has been more than 2.0x that was witnessed last year," according to the report.

The market share of private non-life insurance companies has witnessed a sustained increase to 61% in YTD FY23 from 58% in YTD FY22 and 57% in YTD FY21.

The health insurance premiums has been the primary growth lever of the non-life insurance industry since the commencement of the Covid-19 pandemic. This has resulted in the segment increasing its market share from 29.6% for YTD FY21 to 35.3% for YTDFY23.

The health segment has grown by 23.6% for YTD FY23, which is lower than the growth of 25.9% witnessed for YTD FY22, it said.

CareEdge Ratings said that in YTD FY23, Motor insurance reached ₹65,363.6 crore and has continued to grow at over 4.5 times the rate reported for the similar period in FY22.

“In YTD FY23, Motor OD grew by 16.9% (vs. 4.1% for YTDFY22) and Motor TP rose by 15.4% (vs. 3.1% for YTDFY22). For January 2023, Motor OD and Motor TP premiums grew by 13.4% and 12.7%, respectively. The growth is attributable to last year’s low base, the increase in Motor TP rates and higher vehicle sales," it stated.

The rating agency estimates that the Indian non-life insurance market would grow by approximately 13-15% over the medium term. The health insurance segment will continue to grow at around 15-18% reaching the ₹1 lakh crore mark and motor insurance premiums would grow at 11.5%-13.5% crossing ₹85,000 crore in FY24.

“The growth would be driven by popularity of health insurance products/schemes, growing demand for motor insurance (Third party & Owner damage) products due to post-covid rising demand for personal mobility space leading to a shift in vehicle ownership patterns, expected rise in per capita / disposable income levels, a greater volume of transactions under segments such as fire, marine, export credit, customised products especially in motor and health insurance and gradual introduction of new products," the report said.

Further, improving profitability, stabilisation of loss ratios which had increased during the pandemic, expenses of management would be controlled given the upcoming regulations around the same, enabling regulatory environment, strengthening of distribution networks (increase in the number of partners, digital issuance and online channels are expected to witness continued growth) higher investment yields due to a rising interest rate environment and adequate availability of growth capital will support growth.

Companies are expected to incur significant investments into overall digital enablement across the distribution channels along with expanding the online/digital distribution channel, simplifying the insurance purchase experience boosting underwriting capacities including automated/AI-based underwriting while maintaining a focus on cost improvement to sustain margins, it added.

Overall, the outlook is expected to be stable in the medium term. However, intensification of competition and an uncertain geopolitical environment, and high inflation, can negatively impact economic growth and subsequently the non-life insurance sector.

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