India’s non-life sector could see 15% growth in the medium-term

This would be driven by India’s GDP and disposable income levels. 

In April 2024, the non-life insurance industry reported a premium of Rs29,679.0 crore, growing at 15.9% compared to 20.4% in April 2023, data from the General Insurance Council showed.

This growth was primarily driven by the health, motor, and fire insurance segments, despite declines in engineering, crop insurance, and aviation. 

Excluding health, the industry's growth in April 2024 was 15.3%, with motor insurance significantly contributing to this figure.

Health insurance continues to dominate the market, increasing its share from 40.7% in April 2022 to 42.3% in April 2024, though this share may slightly decrease as other sectors grow. 

The health segment grew by 16.6% in April 2024, down from 23.6% in April 2023. Motor insurance reached Rs7,082.1 crore, growing at 18.3% in April 2024, compared to 23.0% in April 2023. 

Within motor insurance, the Motor OD segment grew by 23.6% in both years, while Motor TP grew by 14.6% in April 2024, down from 22.5% in April 2023. 

The Motor OD segment's faster growth is attributed to a robust automotive industry, increased two-wheeler sales, and sustained passenger vehicle demand, particularly SUVs, leading to higher motor insurance premiums per unit. 

The fire segment also saw significant growth, largely due to renewals.

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“FY25 has begun on a robust note with April 2024 growing at 15.9%. Broadly speaking, the first quarter of the financial year accounts for around 20% of the sector’s premiums and this trend is likely to persist in FY25,”  said Saurabh Bhalerao, associate director, CareEdge Ratings, in a research note.

“The industry’s growth will continue to be driven by the health and motor insurance segments as they account for around 66% of the premiums. Further any Motor TP rate hike could also contribute to the growth. Additionally, competition is slated to rise especially in the health segments as new companies have commenced operations while others continue to be in line to enter the segment.” Bhalerao added.

Gaurav Dixit, director, CareEdge Ratings, projects the non-life industry to grow at a steady pace of about 13% to 15% in the medium term. This increment would be bolstered by India’s GDP and disposable income levels. The industry will also benefit from a favorable regulatory environment, including the denotification of tariffs, minimum rural, social, and motor third-party obligations, and initiatives like Bima Trinity. 

“Further a focus on containing overall expenses and strengthening distribution networks will also contribute to the sector's growth. Additionally, tensions around the Red Sea may impact the marine segment. Despite this, the overall outlook for the non-life insurance sector remains stable in the medium term. However, intensified competition, an uncertain international geopolitical environment, could potentially affect economic growth and subsequently impact the non-life insurance sector.” Trinity said in the note.