Indian non-life insurance premiums dwindle 10.6% in April

Monthly premiums declined 11.3%, with the motor segment plunging 49%.

Indian non-life insurance premiums slipped 10.6% to $1.8b (INR14,209 crore) from $2.09b (INR15,892 crore) in April 2019, brought about by the downturn in general insurance monthly premiums, according to a CARE Ratings report.

Monthly premiums went down 11.3% from a 13.5% increase reported in April last year. Due to the lockdown, all segments except fire, health and liability posted declines in their monthly premium numbers.

In particular, the motor segment witnessed a significant 49% loss YoY as not many vehicles were sold in April this year, with motor own damage (OD) premiums plunging 51% YoY and motor third-party (TP) premiums falling 47.6% YoY.

The non-increase in premium rates for third-party insurance liability cover may have also been a contributing factor in the downfall in motor TP premiums, the report said.

The fire segment grew 41% YoY primarily due to an uptick in reinsurance rates by the state-owned GIC Re in March 2019 and January 2020, but was lower than the 51.5% growth posted last year.

The health segment inched up 6.2% which, along with the fire segment, prevented the entire non-life insurance premium from being a washout, the report noted. However, the growth may have been affected by the Insurance Regulatory and Development Authority (IRDAI) allowing the payment of renewal premium due from 25 March to 3 May by 15 May, and permitting the payment of health premiums by installments.

The insurance sector is expected to witness muted growth in Q1FY2021 due to the extended lockdown, but the pandemic could cause an increased interest in the health segment. Further, claims may be lower which will have a lower impact on the combined ratio of the non-life companies, the report concluded.

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