Covid-19 pandemic is changing the dynamics of the general insurance industry, with health insurance having overtaken the motor insurance business for the first time ever to emerge as the largest portfolio in the general insurance industry in the first two months of this fiscal. The health segment has contributed 36 per cent (30 per cent in the year ago period) of the domestic general insurance premium with premium income of Rs 9,122 crore during April-May in fiscal 2020-21 as against Rs 8,484 crore a year ago, while motor portfolio at Rs 6,753 crore has seen its market share shrinking to 26 per cent (37 per cent in the year ago period) in the same period from Rs 10,511 crore last year, according to data from General Insurance Council. This comes amid the lockdown-induced slide in car sales during this period, which has impacted fresh premium inflows in the motor segment.
During fiscal 2019-20, the motor business generated Rs 69,208 crore of premium income while health was only Rs 51,637 crore. Vehicle sales fell a massive 75 per cent decline in the April-June period of the financial year 2020-21 due to the lockdown. The health insurance segment, on the other hand, has grown in the June 2020 quarter mainly due to increased awareness level about health insurance amid Covid-19 pandemic and is set to grow faster in the coming months, said an insurance official.
Insurance regulator IRDAI has mandated all the 30 general and health insurers to start offering individual Covid-specific standard health policy called “Corona Kavach”. It has advised insurance companies to provide a 5 per cent discount in premium to doctors, nurses and other healthcare workers.
As Covid-19 has pushed the sales of health covers in the country, the role of six standalone health insurers and general insurers has been prominent in maintaining the premium growth, both for the month of June and for the June quarter. “These products are timely and will meet the requirements of all – especially of the vulnerable population… Depending on the duration of the pandemic, we will continue to sell this product till March 2021,” said Shreeraj Deshpande, Chief Operating Officer, Future Generali India Insurance.
The recent trends have been positive as economic activity restarted in several parts of the country. “Segments such as health insurance witnessed demand amid the heightened health concern,” said an official of a private insurance firm. “We will be bringing a product variant towards the second half of the year… and we are looking at launching Covid specific riders to address the incremental demand of the consumers in today’s times.”
The domestic general insurance industry, led by state owned New India Assurance (NIA), has returned to the positive growth trajectory in premium income in June, after continuously recording negative growth in March, April and May. The month of June witnessed mid and large private sector companies, which had recorded a negative premium growth in the last three months — March, April and May — returned to the positive growth path. However, for the first quarter ended in June, the industry with 33 players, has remained in the negative zone in its premium income.
The industry has seen a growth 8 per cent year- on- year (Y-o-Y) growth in the month of June (at Rs13,961 crore) but has recorded a degrowth of 4.24 per cent Y-o-Y in June quarter (at Rs 39,392 crore), according to data from the IRDAI. The industry has seen new trends emerging in the last couple of months when Covid -19 disruption affected the functioning of the industry. Leading PSU general insurers, New India Assurance and United India, have gained market share while two largest private sector general insurers have lost the market share.
NIA, the largest general insurer in the country, has seen its market share spurting to 19.11 per cent in the June quarter (Q1) of FY 2020-21 from 17.38 per cent in the year-ago period, while ICICI Lombard General Insurance, the largest private sector company has seen its market share falling from 8.49 in Q1 FY 2019-20 to 8.40 in Q1 FY 2020-21.
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