India’s non-life sector driven by health, motor in January

Geopolitical tensions and elevated inflation could affect the sector in the medium term.

Non-life insurers of India saw premiums in January climb 6.6% to of Rs 27,220.6 crore, albeit slower than the previous month’s 14.7% and last year January’s 19.4%.

The growth was attributed to the health and motor OD businesses, CareEdge Ratings said. Year-to-date (YTD) fiscal year 2024 (FY24), the industry has shown double-digit growth, likewise driven by the aforementioned sectors.

However, this increment was perceived “subdued” than the previous year mainly because a fall in liability, crop insurance, and marine cargo, whilst fire and credit guarantee segments showed low growth rates year-on-year.

CareEdge Ratings estimates that the Indian non-life insurance market will continue to grow at a rate of approximately 13-15% in the medium term. 

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The health and motor insurance segments are expected to breach the Rs 1 lakh crore and Rs 80,000 crore thresholds, respectively, in FY24. 

The growth of the industry will be primarily driven by increasing disposable income levels and growth across other segments.

Factors contributing to the sector's growth include a favourable regulatory environment, stabilization of loss ratios, containment of expenses, strengthening distribution networks, and higher investment.

However, competition is expected to increase with new companies entering the market. 

Additionally, geopolitical tensions and elevated inflation could potentially impact economic growth and subsequently affect the non-life insurance sector. Despite these challenges, the overall outlook for the non-life insurance sector remains stable in the medium term.