Private general insurers push up market share, competition set to intensify

PRIVATE SECTOR non-life insurance companies have increased their market share in the financial year 2023-24 (FY24) amid intense competition in the sector, mainly in the health and motor businesses. The overall market share of private non-life insurers has witnessed a sustained increase to 65 per cent for FY24 from 62 per cent in FY23 and 59 per cent in FY22 highlighting the persistent growth differential between the public and private sectors.

The non-life general insurance industry reported a lower growth during FY24 with a premium income of Rs 2.89 lakh crore, a rise of 12.78 per cent compared to the 16.3 per cent growth in premium income at Rs 2.56 lakh crore in FY23, according to figures released by the General Insurance Council.

Competition is likely to increase, especially in the health segments as new companies have commenced operations while others are waiting in the wings to enter the segment. Till date, motor third party rate hike has not been announced forfy 25, which could impinge on the growth.

Additionally, tensions around the Red Sea and the Iran-israel conflict may impact the marine segment. However, intensified competition, an uncertain international geopolitical environment and elevated inflation may negatively affect economic growth and subsequently impact the non-life insurance sector.

The industry’s growth is driven by the health and motor insurance segments. However, compared to last year, there was a decline in growth due to a fall in liability, crop insurance and credit guarantee, while fire and marine segments reported subdued growth numbers compared to last year.

Further, for the month of March 2024 as well, the growth rate was comparatively lower as growth in health was offset by slower growth in motor and a fall

in the fire segment. New India Assurancehasremainedtheleading player with a premium income of Rs 37,035 crore in FY24, a rise of 7.40 per cent over the last year.

PSU general insurers’ March 2024 numbers rose by 9.9 per cent, more than double the of 4.0 per cent in March 2023. However, the annual performance, although positive, was muted by nearly 130 bps compared to last year. On the other hand, the private sector general insurers reported a growth of 9.5 per cent for March 2024 as against 13.2 per cent in March 2023.

“The FY24 numbers have demonstrated robust growth which can be primarily attributed to group health and motor insurance (premiumisation of the market with SUV sales increasing their share in the PV segment,” said a Careedge Ratings report.

Meanwhile, specialised insurers posted a drop of 28.9 per cent in March 2024 compared to a rise of 14.1 per cent in March 2023. Similarly, the FY24 numbers continued to reduce by 29.3 per cent vs. a growth of 5.1 per cent in FY23. This has been primarily because crop insurance premiums of Agriculture Insurance Company reduced by 32.1 per cent for FY24, as select public sector general insurers and a few private general insurers picked up a larger proportion of crop insurance premiums.

Standalone private health insurers (SAHI) continued their growth momentum as the March 2023 numbers topped the Rs 4,000 crore mark from Rs 3,000 crore in February 2024 and coming in higher by 25.9 per cent over March 2023 as they continue to gain share in retail health from PSU insurers and increasing their share of the group health pie. Further with IRDAI approving two SAHIS in F24, competition is expected to accelerate even further in FY25. Health insurance premiums continue to be the primary growth driver of the nonlife insurance industry. This has increased the segment’s market share from 33.3 per cent for FY22 to 37.6 per cent for FY24. The health segment has grown by 20.2 per cent for FY24, which is lower than the growth of 23.2 per cent witnessed for FY23.

“The industry’s growth will continue to be driven by the health and motor insurance segments as they account for around 68 per cent of the premiums. Broadly speaking the first quarter of the financial year accounts for around 20 per cent of the sector’s premiums and this trend is likely to persist in FY25,” Careedge Ratings said.