India’s non-life premiums trip over bad crop insurance in August

The sector is seen to grow 13% to 15% in the medium term.

In August 2023, the non-life insurance industry in India faced a setback, with premiums totalling Rs23,558.3 crore, marking a 3.7% decline, and ending a 10-month streak of growth, data from General Insurance Council and Insurance Regulatory and Development Authority of India (IRDAI) showed.

According to CareEdge Ratings, August 2022 saw an impressive growth rate of 11.9%. This decline can be attributed primarily to a significant drop in crop insurance premiums. 

Nevertheless, the industry has maintained double-digit growth for the year-to-date in fiscal year 2024 (FY24), largely driven by health and motor insurance. However, this growth was tempered by declines in crop insurance, liability segments, and underperformance in the fire insurance segment compared to the previous year.

Mixed sub-sector performance

Interestingly, public sector premiums now account for approximately a third of the total premium, underscoring the growth gap between the public and private sectors.

General insurers experienced a 12.8% increase in August 2023, up from 9.3% growth in August 2022, driven mainly by health and motor insurance. 

The growth in motor insurance was boosted by renewals and passenger vehicle sales. 

However, the slower growth in the fire insurance segment contributed to an overall slower growth rate compared to the previous year.

Year-to-date figures for FY24 also showed a decline of 57.7% compared to a 4.4% rise in the comparable period in FY23, largely due to a substantial reduction in crop insurance premiums from the Agriculture Insurance Company.

For the year-to-date in FY24, most segments, except crop insurance and liability, demonstrated year-over-year growth. 

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Health insurance premiums continued to be the primary growth driver, increasing the segment's market share from 34.8% for the year-to-date in FY22 to 38.8% for the year-to-date in FY24. The health segment grew by 22.6% for the year-to-date in FY24, surpassing the 20.5% growth witnessed for the same period in FY23.

Motor insurance premiums reached Rs. 33,445.0 crore for the year-to-date in FY24, growing at 18.5% compared to 20.3% in the previous year.

Up ahead

Looking ahead, CareEdge Ratings estimates that the Indian non-life insurance market will continue to grow at a rate of approximately 13-15% in the medium term. 

Health and motor insurance segments are expected to be the primary growth drivers, supported by rising disposable incomes and customized products. 

The sector's growth will also benefit from improved profitability, cost containment, a favourable regulatory environment, and expanded distribution networks. 

However, intensified competition, global uncertainties, and high inflation could potentially impact the sector negatively. Overall, the medium-term outlook for the non-life insurance sector remains stable.