Health insurance premium rise spurs non-life growth, shows data

Health insurance premiums, which registered a 25.6 per cent growth — almost double that of last year — have been the main driver of the double-digit growth in non-life insurance in FY22. This comes after a horrid FY21, where the industry registered a low single-digit growth.

In FY22, health insurance premiums rose to Rs 73,582.13 crore, becoming the main line of business for non-life insurance sector, with a 33.33 per cent market share. This is a jump of 380 basis points (bps) over last year, data from the General Insurance Council showed.

Health premiums grew at 13.5 per cent and 13 per cent in FY21 and FY20, respectively. Non-life insurers have reported an 11 per cent growth in premiums in FY22 to Rs 2.2 trillion. This compares with Rs 1.98 trillion worth of premiums collected in FY21, up 5.2 per cent over FY20. The industry had posted a growth of 11.7 per cent in FY20 over year-ago period.

Within the health segment, retail health premiums reported a 16.5 per cent growth in FY22 over last year. This is mainly driven by standalone health insurance companies with 28 per cent growth.

General insurers reported a meagre 7 per cent growth in retail health premiums during the same time.

Group health premiums, on the other hand, reported a higher growth than retail health premiums at 31 per cent. This is because of a spike in demand with pick up in hiring across sectors and price correction.

Group health growth is a function of the economy. On the other hand, retail health growth is organic and depends on the awareness and needs of individuals. “There is a huge demand for quotes on group health policies from corporates. Even smaller corporates have realized that they need to provide protection to their employees. And, the pandemic has certainly boosted the demand for such policies,” Bhaskar Nerurkar, head — health administration team — Bajaj Allianz General Insurance, had said.

The key trend in FY22 has been high growth in health and low growth in motor. Among private players, ICICI Lombard continues to be the market leader in motor and star in retail health, ICICI Securities said in a report.

While insurers have witnessed a jump in health premiums over the last two years, their claims burden has also gone up.

Insurers have paid around Rs 25,000 crore of Covid-related health claims in the two years of the pandemic, according to the General Insurance Council. Incurred claims ratio of private sector general insurers and standalone health insurers in the health segment also went up by over 5 per cent and 10 per cent, respectively, in FY21.

In FY22, motor insurance premiums showed a meagre growth of 4 per cent, rising to Rs 70,432.59 crore. In FY21, motor insurance premiums had reported de-growth of 2 per cent. In FY20, the segment reported a 7 per cent growth over the past year. Motor premiums market share in non-life insurers’ business dropped to 31.9 per cent, a decrease of 210 bps over last year.

Growth in the motor segment was on a declining trajectory even before the onset of the pandemic, as vehicle sales got severely impacted owing to a slowdown in the economy.

The pandemic further accentuated this problem and now the chip shortage issue has added to the misery.

The third-party premium hike proposed by the insurance regulator may come as a relief to the sector this year.

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