General Insurance Sector likely to see 7-9% growth in GDPI: Reports ICRA


General Insurance covers home, travel mishaps, vehicles, and health insurance(non-life asset) from fire accidents, man-made disasters, and theft. Different types of General Insurance include motor insurance, health insurance, travel insurance, and home insurance.

Assists by higher growth and rush towards health and motor insurance segments, the General insurance industry is nearly to hit a 7-9% GDPI (Gross Direct Premium Income) growth in FY22. As per the credit rating agency, ICRA has stated in its report that the industry’s total GDPI has grown to 4% on a year-on-year basis to ₹1.85 lakh crore in FY21.

While Public Sector Insurance Co.’s were failed to adjust & adapt to new normal online mode of work which has led to slower growth of GDPI, as there was more dependency on physical meetings & not adapting to the new normal change and to become adaptive, which resulted in 2% year-on-year basis decline in insurance business amounting to ₹71,800 crores in  current FY21, whereas, the private sector companies declared a highest 8% year-on-year basis increase in GDPI amounting to ₹1.13 lakh crores in same FY as compared to the public sector insurance company, the further agency added.

As General Insurance Co.’s are expecting a 7-9% growth in GDPI in FY22, assisted by huge growth in health segment as Covid-19 pandemic has let people plan healthcare insurance for themselves and their family members as in today’s time everyone has become health conscious and a rise in motor vehicle insurance segment too.

The particular analysis is based on the performance of 17 general insurance companies closely representing 90% of the industry-wide GDPI written during the 9 months of FY21, the agency reported. Out of 17 General Insurance Companies analyzed, 4 are from the public sector and the rest 13 from the private sector.

Regardless of underwriting losses widen in FY22 due to a rise in medical claims following the second wave of Covid-19 spread, the insurance sector is expected to report a growth of  3-4.5% on marginal return on equity in FY22, largely supported by investment income which is mostly regulated by IRDAI(Insurance Regulatory &  Development Authority of India) the sector regulator.

As per the report, PSU insurers are expected to get marginal GDPI growth of 4-5 % in FY22 because most of the insurers were remain stretched on their solvency profit, and state-owned insurers expected to post high underwriting losses of ₹12,400-13,500 crore in the current fiscal year. This is due to the mostly high combined ratio of 121-123% in 21-22 by probable high claims ratio of medical claims on account of uncertainty related to the second wave of the pandemic.

As Private Sector Players had a higher growth approach in 18-19 and 19-20, and have gained high market share from the PSU players. This sector was nicely able to adapt to new changing business dynamics in FY22 at a faster pace.

The General Insurance sector is expected to be supported by high under penetration across the different segments in the general insurance industry & likely the demand for the health segment (health insurance and medical claims) post-pandemic will be much higher.

There is also a chance of consolidation among the small players in the industry to grow and compete with other big players.

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