Taking note of current economic slowdown in India, ICRA said that Indian General Insurance industry is expected to grow at a lower rate of 15% in FY14.
In contrast, over the past five years, the Gross Premium written by the general insurance industry has grown at a compounded annual rate (CAGR) of 18.1% to Rs 650 billion in FY13, with slowdown visible since FY12 in line with economic activity trends.
“There is a high co-relation between the premium volumes of the General Insurance Industry and the National GDP growth rates. The recent Slowdown in the economic activity has impacted volumes”, says Karthik Srinivasan, Sr. VP, Co Head Financial Sector Ratings, ICRA Ltd.
ICRA’s recent study on the General Insurance Sector in India analyses the performance of 13 General Insurance Companies (comprising four insurers from the Public Sector and nine from the Private Sector) collectively representing around 90% of the Industry-wide Gross Premium Written (excluding ECGC and AIC of India) in FY13 and H1FY14.
According to the study private sector players have maintained a higher growth rate compared to their PSU peers and have seen a gradual increase in their market share to 47% in H1FY14 (40% in FY08).
“We expect the trend to continue going forward with our forecast of relatively higher growth for Private Sector players,” says Srinivasan.
Automobile sector is largest stake holder (share of ~46%), but growth expected to moderate in line with decline in growth in the industry. Health sector (share of 26%) is expected to maintain steady growth while Fire and Engineering (share of ~ 14%) expected to be impacted directly by slowdown in economy with the postponement of capital expenditure and new infrastructure projects, the study reads.