In October 2023, the non-life insurance industry in India witnessed a modest growth rate of 10% year-on-year (Y-o-Y). Despite the festive season typically associated with higher car sales, the motor insurance segment experienced mixed growth dynamics. Overall, the industry’s premium growth remained subdued, recording a 9% Y-o-Y increase.
Motor Insurance Landscape
Analysis by Kotak Institutional Equities revealed contrasting trends within the motor insurance sector. While the motor own damage (OD) segment saw a growth of 12%, motor third party (TP) premiums declined by 7% Y-o-Y. This divergence in performance occurred amid robust volume growth in the domestic automobile industry, with passenger vehicles (PVs) and two-wheelers (2W) witnessing significant increases of 17% and 42% Y-o-Y, respectively.
Factors Influencing Growth
Several factors influenced the growth patterns in motor insurance premiums. General insurers may have adopted strategies involving lower tariffs or premiums for motor OD policies, contributing to its growth. Additionally, a potential decrease in renewals for motor TP policies could be linked to the expiration of the mandatory 5-year third party insurance for two-wheelers implemented in September 2018.
New-age insurers such as Digit and Acko continued to demonstrate substantial growth rates of 35-38% in motor OD premiums. However, heightened competition from these players might have resulted in lower ticket sizes, indicating a competitive environment within the industry.
Pick-Up in Health Insurance Premiums
In contrast to the modest growth observed in motor insurance, the health insurance sector experienced a notable uptick in premiums.
Retail Health Insurance
In October 2023, the retail segment of the health insurance sector saw a robust 23% Y-o-Y growth, surpassing the growth rates observed in the preceding months. Standalone health insurers (SAHIs) exhibited faster growth, expanding at a rate of 27%, outpacing private general insurers (GIs) at 19%. Public sector undertaking (PSU) insurers also demonstrated improved performance, recording a growth rate of 17%.
Group Health Insurance
While standalone health insurers showcased strong growth in the group health insurance sector, posting a 41% Y-o-Y increase, the overall performance of group health premiums witnessed an 8% Y-o-Y decline. This decline was primarily attributed to a significant 42% Y-o-Y decrease in contributions from PSU insurers, which impacted the collective performance of the sector.
In summary, while the motor insurance segment registered modest growth, the health insurance sector experienced a notable pick-up in premiums, driven by robust performance in the retail health segment and contrasting dynamics in group health insurance.
