The industry’s demand will be sustained by robust growth in the health segment as well as in the motor segment.
The overall growth in premium underwritten by general insurance companies declined during the quarter ended June of FY25 in the wake of the lower growth rate in the motor and health segments.
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The growth in premium underwritten declined to 13.33 per cent at Rs 72,758 crore in the June quarter of FY25 as against a growth of 17.88 per cent (Rs 64,198 crore) in June quarter of FY23 and 22.15 per cent growth in the same period of FY22, according to data from the General Insurance Council, the apex body of general insurance companies in India.
The growth in premium underwritten in the health insurance segment fell to 16.58 per cent at Rs 29,915 crore during June 2024 as against the growth of 20.75 (Rs 25,660 crore) in FY23 and 21.77 per cent in the same period of FY22. On the other hand, motor premium showed a lower growth of 11.95 per cent at Rs 21,348 crore during the June quarter this fiscal as against a growth of 20.93 per cent (Rs 19,069 crore) in the same quarter of FY23 and 26.32 per cent in FY22, according to GI Council data.
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New India Assurance, the largest general insurer, reported a 2.82 per cent growth in premium underwritten at Rs 10,670 crore during the June quarter of FY25 as against a growth of 8.66 per cent in the same period of FY24. In the health segment, standalone insurers reported a 24.95 per cent growth in premium to Rs 8,318 crore during the latest quarter.
“India, being one of the fastest-growing insurance markets, still has a relatively low insurance penetration rate of four per cent of its GDP, leaving a sizable gap. This gap is largely due to a lack of awareness and accessibility of insurance and its critical role in financial stability during unforeseen incidents,” said the CEO of an insurtech firm.
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Lower growth rate in motor and health segments
In the wake of the lower growth rate in motor and health segments, growth in premium underwritten declined to 13.33 per cent at Rs 72,758 crore in the June quarter of FY25. In June 2024, however, the general insurance sector received a major relief amounting to over Rs 18,000 crore with the GST Council dropping demand for GST on insurers.
The industry’s demand will be sustained by robust growth in the health segment as well as in the motor segment. Additionally, competition is slated to rise especially in the health segments as new companies have commenced operations while others continue to be in line to enter the segment, said a CareEdge Ratings report.
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The report estimated that the Indian non-life insurance market will grow at a rate of approximately 13-15 per cent in the medium term. The overall business growth would be supported by macroeconomic factors, a favourable regulatory environment and the Bima Trinity, it said.
Further, a focus on containing overall expenses and strengthening distribution networks is also anticipated to contribute to the sector’s growth. Additionally, reports of composite licenses and M&A could alter sectoral dynamics. The overall outlook for the non-life insurance sector remains stable in the medium term. However, intensified competition, and an uncertain international geopolitical environment, could potentially affect economic growth and subsequently impact the non-life insurance sector, CareEdge Ratings said.
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In June 2024, ahead of the Union Budget, the general insurance sector received a major relief amounting to over Rs 18,000 crore with the GST Council dropping its demand for GST on the insurers.
The reliefs allowed by the GST Council include the dropping of GST demands amounting to over Rs 18,000 crore at an industry level, providing a significant respite to the sector, according to the General Insurance Council. The GST demand was on co-insurance and reinsurance commissions and taxing of reinsurance on crop schemes.
GI Council’s argument was that GST demands on co-insurance and reinsurance commissions lack a legal foundation and it also highlighted the implications of taxing reinsurance of crop insurance schemes as it may not benefit the farmers. “These efforts culminated in the GST Council granting the much-needed relief,” GI Council said last month.
