Health premiums on the mend: Non-life insurance in double digits

Health premiums have picked up again after a slight moderation in growth, taking the non-life insurance industry's growth to 22 per cent in November, and to almost 17 per cent so far this financial year.

Health premiums grew by 22.54 per cent in the April-November period, driven largely by group health plans, which have seen good growth due to rationalisation of discounts in premiums caused by adverse claim ratios in prior periods, medical inflation, and enhanced coverage.

Health premiums grew by 29 per cent in the same period last year.

According to data released by the General Insurance Council, group health premiums grew by 28 per cent in the April-November period, while retail health grew by 15 per cent during this period.

Retail health growth is seen to be moderating from the peak seen during the pandemic, which was largely on expected lines.

“Despite a higher base and lower growth rates compared to FY22, the health segment is anticipated to witness continued demand amid increased awareness post-Covid and rationalisation of discounts”, said analysts at CareEdge.

Motor premiums, which were subdued for most part of the pandemic, are seeing healthy growth in FY23, owing largely to lower base of last year, repricing of motor third party premiums, and higher vehicle sales.

So far in FY23 (April-November), motor premiums have grown at four times the rate they were growing during the same period last year.

According to data, motor insurance premiums have grown by 17 per cent year-on-year, with own-damage premiums growing by 18 per cent, and third-party premiums growing by 16.35 per cent.

In the same period last year, motor premiums were growing by only 4 per cent.

“The long-term growth of motor insurance would be driven by the growth in the automotive industry, which would increase penetration among uninsured vehicles on the road,” the report said.

The other segments of the general insurance industry that reported growth are fire (11 per cent YoY growth) and crop (4 per cent).

In the same period last year, crop insurance premiums had shrunk by nine per cent.

So far this financial year, the non-life insurance industry has earned premiums of Rs 1.65 trillion, up 16.5 per cent YoY, with general insurers' premiums growing by 16.6 per cent to Rs 1.40 trillion, and standalone health insurers reporting a premium growth of 27 per cent.

With the easing out of the pandemic and higher investment yields, sector profitability is anticipated to improve as the loss ratio of the health sector moderates.

However, inflation and slowdown in the economy continue as risks to the growth in the sector, industry experts said.