Health, fire sales help general insurers close FY21 with 5.2 pc growth

Thanks to the unprecedented demand for health insurance due to the pandemic and also demand for fire protection, the non-life industry could close the financial year 2020-21 with high single-digit growth of 5.2 per cent at Rs 1,98,734.7 crore.

This growth rate, however, is less than half of what the industry had closed with in 2019-20 when it had logged in 11.5 per cent.

According to a sectoral analysis by CARE Ratings on Monday, thanks to the pandemic, the non-life premiums could end 2020-21 on a positive note with March numbers showing strong growth of 23.4 per cent over the same a year ago as against a 11.5 per cent decline in March 2020.

Within the industry, general insurers grew 3.4 per cent to Rs 1,69,840 crore in the year. Standalone private health insurers clipped at 11.1 per cent to Rs 15,720 crore and specialised state-run insurers grew 26.2 per cent to Rs 13,176.4 crore, taking the total industry premium to Rs 1,98,734.7 crore as of end-March.

Growth was driven primarily by health insurance that clipped at 31.5 per cent, including the numbers of HDFC Ergo Health before merger, and excluding this the industry grew 11.1 per cent in 2020-21, according to the analysis by the agency.

In 2019-20, the industry had logged in a growth of 11.5 per cent Rs 1,88,917 crore over 2018-19 when it stood at Rs 1,69,448.4 crore, according to the agency.

In March, the industry wide premium reached Rs 19,298.9 crore compared to Rs 15,635.4 crore in March 2020, clipping at 23.4 per cent, against an 11.5 per cent contraction in the year-ago month.

Growth continued to be driven by fire and health insurance segments, according to the agency's analysis.

Standalone health numbers are not comparable due to takeover of Reliance Health Insurance portfolio by Reliance General Insurance and HDFC Ergo Health Insurance merger with HDFC Ergo General during the year.

If HDFC Ergo Health is removed from the standalone health insurers and growth is recomputed, the revised number would be 31.5 per cent instead of the reported 11.1 per cent for 2020-21, the report said.

During the year, general insurers broadly moved away from crop insurance, and the specialised state-owned insurers took their place, and therefore a comparison of segmental growth rates is not appropriate.

Despite the manifold challenges present in the current scenario, the non-life industry ended 2020-21 on a positive note.

The growth was driven by the private sector which grew at a much faster pace compared to the public sector.

Within the various segments, fire and retail heath contributed to the maximum growth. However, growth momentum was pulled by the fall in motor insurance premia which normally used to contribute over 40 per cent of the industry income.

In 2021-22, along with the expected uptick in the health segment, any increase in the premium levels of the motor third-party segment, which was held steady in 2020-21, could drive the non-life premiums.