Non-life insurance sees robust growth
Backed by a healthy growth in motor and health insurance, investments of non-life insurance companies rose by around 128 per cent in the past five years. A majority of the investments got channelised into government securities.
According to the data from the Insurance Regulatory and Development Authority of India (Irdai), total investments of non-life insurance companies as of March 31, 2016, stood at around ~188,126 crore, against ~82,520 crore as of March 31, 2011, a growth of 128 per cent.
In 2017, the premium collected on account of crop insurance scheme is likely to significantly add to the investable pool of non-life insurers. Informal estimates suggest, total premium collected from the first year of operation of Prime Minister Fasal Bima Yojana (PMFBY), launched in February 2016, is expected to be around ~22,000 crore.
According to Sanjay Datta, chief underwriting and claims, ICICI Lombard General Insurance, much of the growth of non-life insurance has been driven by retail participation, particularly motor and health insurance. At present, at ICICI Lombard, retail accounts for about 65 per cent of the total premium collection, which was around 50 per cent about two to three years ago.
“Over the last two to three with a share of 43.89 per years, we have seen a 15-16 cent in 2015-16, against 44.14 per cent growth in premium, per cent in 2014-15. It reported mostly driven by health and growth of around 13.17 per motor insurance,” said Datta. cent in 2015-16, against 10.52
The motor insurance business percent in 2014-15. continued to be the However, one of the highest largest non-life insurance segment growth in the general insurance sector comes from health insurance. The premium collection in this segment stood at ~27,457 crore in 201516, against ~22,636 crore of 2014-15, a growth of 21.30 per cent. Further, after the IPO of the public sector general insurance companies, the retail penetration of non-life insurance is likely to increase due to heightened competition to grab a market share.
“After the successful IPO, the general Insurance companies in the fray would secure capital which would enable them for higher growth. Currently, due to solvency margin restrictions , growth is measured and controlled. This would change as the insurers would be free to expand and this might result in higher discounts as they would try and increase the market share. As of now there is no scope for discounts , but the picture would change once the capital flows in,” said K Sanath Kumar, chairman and managing director, National Insurance Company.
Much of the investment brought about by growth in general insurance has flown into government debt over the past five years. General insurance companies are mandated to invest about 30 per cent of their premium in government securities. However, most insurance companies have been investing more than required in government securities.