India’s non-life insurance increases 24.4% in August

This is more than double of last year’s growth of 10.1% in the same month.

India’s non-life insurance industry showed robust growth in its August numbers, reporting a 24.4% growth against the 10.1% witnessed in August 2020 and the 19.5% witnessed in July according to ratings firm, CARE Ratings.

Non-life insurance premium reached Rs 21,871.7 crores ($2.96b) for the month of August 2021 compared to Rs. 17,580.6 crores ($2.38b) in August 2020. 

The growth was driven by the health segment; however, the crop insurance segment emerged as the largest contributor to the premiums for August.

The general insurance segment grew at 17.9% for August which is higher than the 5.2% growth witnessed last year. There was a decline of 0.6% in YTD August. The General Insurance segment continues to maintain the highest share, however, its continued growth can be attributed to the health portfolio.

Meanwhile, specialized insurers have grown by 52.5% for the month, significantly higher vs. last year. The growth was to be attributed to the cop insurance premiums, which have increased due to the kharif season.

CARE also reported that public insurers premium growth was higher at 30.1% compared to the 19.9% premium growth reported by the private players. Public insurers growth has been driven by the jump in crop insurance premiums especially in the Agriculture Insurance Company of India Ltd. On the other hand, the YTD August FY22 numbers have continued the previous trend of private players outpacing their public peers.

The ratings agency expects the non-life industry to be driven by the private sector which grew at a much faster rate than the public sector.

The non-life premiums are expected to be driven by a continued uptick in the health segment and as covid claims are moderating compared to earlier levels, the motor insurance segment reporting growth in premiums, albeit on a lower base, and enhanced digital solutions complemented by the offline offerings. 

CARE also noted that the top four segments in the non-life insurance industry account for the bulk of the sector's premiums (over 85% share). IRDAI has recently revamped guidelines on Trade credit insurance, title insurance, and cyber insurance and has also issued an exposure draft on surety insurance. These segments are currently small but could increase their contribution going ahead.

“As mentioned in our earlier updates, Q1 FY22 has been adversely impacted on account of the rise in claims due to the second wave of the pandemic. Given the opening of the economy and anticipated growth in the same, the industry performance is expected to improve over time. However, given that no increase in the motor TP premium has been announced, the sector is expected to witness pressure on near-term profitability,” the ratings agency added.