GENERAL INSURANCE: PREMIUM COLLECTION LIKELY TO MODERATE POST-DECEMBER

General insurance sector, af ter the sharp pick-up post lockdown, is showing signs of a slowdown. The trend in December remained positive with premium collection growing at 10% since last year. However, the numbers are moderating if compared with post lockdown months.

The premium collection in the motor segment has maintained positive momentum since September. But, the collections in the health, fire, and crop segments have moderated when compared to the lockdown months.

Positive momentum in Motor segment:

The improving demand for automobiles is reflecting in the insurance numbers as well. Motor premiums increased 14% YoY in December 2020. This is for the second month that it has gained good traction af ter a constant decline through the lockdown.

Despite the growing premium collection, the business has not yet recovered completely from non-business months of lockdown. Overall motor premiums for March-December 2020 (9MFY21) period is still down 6% when compared to the same period last year.

Fire premium grows but expected to soften:

Fire insurance premiums grew by 30% QoQ in the December quarter. It is marginally higher than 28% YoY growth in 2QFY21

The growth is expected to moderate going ahead. Under the high base effect, it would be difficult to consistently maintain the high growth rate. The premium collection is expected to sof ten from the next quarter onwards.

Retail health moderating

: Increased health awareness post-Covid 19 led to a sharp surge in demand for health insurance. However, the demand is sof tening as overall Covid-19 cases are declining.

The retail health premiums have continued to grow in the December quarter (23% YoY).

However, the pace is slowing down. This segment had grown at 43% in the September quarter.

Like fire, the health segment will also find it difficult to sustain growth under the high base effect. The shif t in momentum is already visible in the numbers. Premium growth for health insurers for December and November were at 26% and 17% respectively. This is a considerable slowdown from peak levels of 57-66% YoY growth seen from August to October 2020.

General insurance sector picked up sharply after the lockdown with strong premium collections. However, the trend is seen moderating after the initial euphoria.

Crops down 21% YoY in 3QFY21

: While other segments (Fire and health) are showing signs of moderation, the crop segment has slowed down considerably in the December quarter. Overall crop premiums were down 21% YoY in Q3FY21.

Closing comments :

All the general insurance segments reported a positive year on year growth in December. Despite that, there is an overall sense of moderation in the trend.

In the coming months, premium collection in the motor insurance segment is expected to sustain. But, other segments like health, fire, and crop protection have either slowed or expected to slow down in the coming quarter. Teji Mandi (TM Investment Technologies Pvt. Ltd.) is a SEB Iregistered investment advisor. No information in this article should not be cons trued as investment advice. Please visit www.tejimandi.comtoknowmore.