Non-life insurers see positive premium growth in June but Q1 sees 4% drop

Standalone private health insurers reported an impressive 42 per cent growth in premiums in June, and 15 per cent growth for the quarter

After witnessing a drop in premiums for two consecutive months in April and May, non-life insurers have seen positive growth of 7.82 per cent in gross premiums in June. But the first quarter (Q1) of the current financial year (2020-21, or FY21) saw premiums of non-life insurers decline 4.24 per cent year-on-year (YoY) owing to the lockdown.

In June, non-life insurers — general insurers, standalone health insurers, and specialised public sector (PSU) insurers — recorded gross premiums to the tune of Rs 13,961.25 crore, compared to Rs 12,947.89 crore last year in the same month. In Q1FY21 though, premiums collected by insurers stood at Rs 39,329.62 crore versus Rs 41,072.14 crore — a drop of more than 4 per cent.

The non-life insurance industry has 25 general insurers (including four state-owned general insurers), five standalone private health insurers, and two specialised PSU insurers.

The general insurers reported 4.11 per cent growth in premiums in June, with premiums to the tune of Rs 12,375.67 crore, compared to Rs 11,886.17 crore. For Q1 of 2019-20 (FY20), general insurers collected Rs 35,667.60 crore as premiums, compared to Rs 37,934.61 crore in the same period last financial year, witnessing a drop of almost 6 per cent YoY.

Among the top general insurers, which command a sizeable market share, state-owned The New India Assurance reported 5.29 per cent growth YoY in Q1, followed by another state-owned insurer United India Insurance, with 8.34 per cent growth in premiums. The large private sector insurers, such as ICICI Lombard, Bajaj Allianz General, HDFC Ergo, and Reliance General Insurance, registered a drop in premium collection in Q1FY20.

On the other hand, standalone private health insurers reported an impressive 42 per cent growth in premiums for June at Rs 1,311.31 crore, and for the quarter, they recorded 15 per cent growth, with premiums collected to the tune of Rs 3,232 crore. Due to the pandemic, the retail health portfolio has seen good growth, as consumers have felt the need to get protection in these uncertain times.

“The industry was de-growing and that has stopped now. But from here on, growth will be somewhat scattered. The motor segment is a problem for the industry. As long as we don’t see a pick-up in car sales, there will not be any incremental premiums coming in for the industry from that segment. Moreover, last year’s business will also see some depreciation, as the age of vehicles will play a factor,” said a senior private sector insurer.

The drag in non-life insurer’s performance, in terms of premiums, has been mainly driven by the motor and the crop segments. Lack of purchase of new vehicles has hit the motor segment hard, along with no hike in third party rates this year, as the regulator has put on hold the hike announced.

In the crop segment, more and more private insurers are shying away from it or becoming more conservative in underwriting such policies due to lack of better reinsurance support. But retail health has been one of the bright spots in non-life insurer’s portfolio, with increased awareness of health insurance in these uncertain times.