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Lockdown, pandemic take toll on general insurers’ business, contracts 10.4% in Apr

Except state-owned New India Assurance (NIA) and United India Insurance (UII), all top 10 general insurers in the country, mainly from the private sector, have been hit by the slowdown.

Written by George Mathew | Mumbai | Published: May 17, 2020 12:27:30 am
insurance sector, insurance sector losses, india economic slowdown coronavirus, New India Assurance, United India Insurance, ICICI Lombard, Bajaj Allianz General Insurance, reliance insurance The domestic general insurance industry, consisting of 33 players, has contracted 10.4 per cent year-on-year (y-o-y) to Rs 14,206 crore in April. In April 2019, the industry expanded 14 per cent to Rs 15,866 crore. (Representative Image: Reuters)

The ongoing nationwide lockdown forced by the COVID-19 pandemic has hit the general insurance industry, with most of the players witnessing negative growth in their premium income in April 2020, and anticipating the decline in the business to continue till September this year.

The domestic general insurance industry, consisting of 33 players, has contracted 10.4 per cent year-on-year (y-o-y) to Rs 14,206 crore in April. In April 2019, the industry expanded 14 per cent to Rs 15,866 crore.

Except state-owned New India Assurance (NIA) and United India Insurance (UII), all top 10 general insurers in the country, mainly from the private sector, have been hit by the slowdown. Bucking the trend, NIA, the largest Indian general insurer, has managed to grow its monthly premium by 7 per cent y-o-y to Rs 3,161 crore in April, the first month of the new fiscal 2020-21.

“It could become possible due to the company’s strong presence on the digital platform. Our entire team has risen to meet the challenges. The loss of premiums in the motor segment was compensated by health and property segments. The premium for property risks have gone up,” said Atul Sahai, CMD, NIA.

The listed NIA has also managed to grow its miscellaneous business which has compensated its loss of premiums in cargo, hull and aviation, a few segments severely impacted by the ongoing countrywide lockdown.

The overall depressive trends in the industry due to Covid-19 pandemic will continue till September 2020. “Hopefully all the segments including motor portfolio will look up,” Sahai said.

The industry with Rs 15,784.66 crore of premium, showed a 10 per cent decline in March while for the whole year at Rs 1.89 lakh crore of annual premium, it has grown 11 per cent — the lowest in recent years. For the rest of the 11 months, the domestic general insurance industry had grown 15 to 16 per cent on average.

United India Insurance has seen its premium remaining almost flat at Rs 1,389 crore during the month. Standalone health insurer, Star Health, at Rs 402 crore, has pulled off the highest growth at 50 per cent y-o-y in the industry during April 2020.

ICICI Lombard, which has been degrowing its premium income to seek a profitable growth for the last one year, has seen a 9 per cent decline in its premium income to Rs 1,395 crore in April, as against 9 per cent growth rate at Rs 1,533 crore in April 2019.

“We have seen degrowth in motor and travel but managed to retain the growth in health and property portfolio in April,” company sources said.

Most of the other major private sector general insurers like Bajaj Allianz General Insurance showed a degrowth of 21 per cent at Rs 876 crore premium income, HDFC Ergo General Insurance (Rs 601 crore, down 16 per cent ), Reliance General Insurance (Rs 721crore, 9 per cent decline), Tata Aig General Insurance (Rs 602 crore, 10 per cent fall), Iffco Tokio general insurance (Rs 503 crore, 25 per cent fall) faced a slowdown in April.

After expanding at 15 per cent to 16 per cent till February, the domestic general insurance industry had started degrowing since March 2020.

The general insurance industry had missed its much expected target of Rs 2 trillion crore annual premium mark in 2019-20 as disruptions caused by nationwide lockdown triggered by Covid-19 pulled down the industry’s total premium in March.97

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