Non-life insurance industry grows over 16% driven by health and motor insurance

Healthy Plan

Driven by a pick-up in health and motor insurance segments, the non-life insurance industry has grown by 16.4% in FY23 compared to 11.1% in the previous year, an industry report on the insurance industry said.

Except for a blip in September 2022, the report by CareEdge said that the segment is on a roll reporting double-digit growth for the month of March 2023 continuing the FY23 trend.

The industry reported a premium of 24,271.4 crore for March 2023, an 11.5% growth y-o-y, the rating agency said in its report.

General insurers’ March 2023 numbers were up by 9.7%, compared to an increase of 13.8% in March 2022, while for FY23, the growth which has been driven by the group health and motor segments, has been twice of what was witnessed last year, said the report.

According to it, standalone private health insurers (SAHI) continued to move on their growth curve as March 2023 numbers touched 3,428.4 crore up from 2,829.9 crore in March 2022 and 2,319.8 crore in February 2023. This monthly growth of 21.2% was higher than the 15.6% reported in March 2022 albeit the growth rate declined sequentially from 26.8% in February 2023.

Meanwhile, the FY23 growth rate too was slower in the current year versus last year. The slowing was on account of the normalised growth in the government and retail health schemes in the current year, while last year, the same had posted significant growth, CareEdge said.

Specialised insurers posted an increase of 16.2% in March 2023 compared to a drop of 18.3% in March 2022, meanwhile, FY23 numbers have remained subdued, growing at 5.3% vs. 14.7% in FY22.

Observing the FY23 numbers, private players grew by 2.2 times their public counterparts given their strong market presence and relatively better solvency levels. The market share of private non-life insurance companies has witnessed a sustained increase to 62% in FY23 from 59% in FY22 and 57% in FY21.

For the month of March 2023, the trend continued with private companies reporting higher growth of 14.8% while public sector non-life insurance companies posted a growth of 5.8%, said the report.

CareEdge estimates that the Indian non-life insurance market would grow by approximately 13-15% over the medium term. The health insurance segment is on track to breach the 1 lakh crore mark, while motor insurance premiums will cross 85,000 crore in FY24 given the fact that they have already crossed 90,000 crore and 80,000 crore mark respectively during the last year, the ratings agency said.

The growth would be driven by the popularity of health insurance products/schemes, growing demand for motor insurance (Third party & Owner damage) products, 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.

According to the rating agency, insurance companies will aim to improve their profitability by stabilising the loss ratios that were affected by the pandemic. They plan to control management expenses in compliance with regulations, and strengthen their distribution networks by adding more partners and using digital and online channels.

The agency also anticipates continued growth in investment yields due to rising interest rates and the availability of growth capital, which will help support the companies’ growth in the future.

The companies are anticipated to make significant investments in digital enablement across all distribution channels, including expanding their online/digital channels to simplify the insurance purchase process. They will also boost their underwriting capacities with automated/AI-based underwriting while keeping a focus on cost improvement to maintain margins.

Although the outlook is expected to remain stable in the medium term, the agency warns that intensified competition, an uncertain geopolitical environment, and high inflation could negatively impact economic growth and, subsequently, the non-life insurance sector., the agency said.

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