Crop insurance drives general insurers’ direct premium growth

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Published: January 21, 2020 10:33:15 AM

Categories such as fire, marine and government health schemes witnessed fall in gross direct premiums

crop insurance, direct premium growthIf one excludes crop insurance, premiums for industry would have been Rs 13,099.1 crore in December 2019, compared with Rs 12,302.2 crore in December 2018, registering a growth of just 6%.

General Insurance companies saw their gross direct premium growing at 13% year-on-year in December, aided by a strong performance from crop insurance. According to a Kotak Institutional Equities report, excluding crop insurance, the growth of the general insurers would have been around 6% due to the slowdown in motor and fire insurance business. Market participants say that weak growth in motor insurance is largely due to the fall in vehicle sales.

Gross direct premiums collected by insurance companies in December stood at Rs 16,084.3 crore, compared with Rs 14,296.4, a growth of 13%. But if one excludes crop insurance, premiums for industry would have been Rs 13,099.1 crore in December 2019, compared with Rs 12,302.2 crore in December 2018, registering a growth of just 6%.

“General insurance companies reported weak growth in premiums (ex-crop business) in December 2019, down from 11-18% during the past five months. Two key reasons are fire business finally slowed down and further slowdown in motor third party (TP),” said Kotak Institutional Equities in its report.

In December, private players saw gross direct premium at Rs 7,699.3 crore, down 1% compared to the previous year. Public sector players saw gross direct premium at Rs 6,342.0 crore, a growth of 12%. AV Girija Kumar, CMD at Oriental Insurance, said, “We had nominal growth in December, our strategy is to focus on bottom line. So, we are not writing huge business this year, we are doing lot of retail business. Motor insurance has been down due to the slump in auto sales growth.”

Motor insurance consists of two categories, motor third party and motor own damage. In December, motor insurance saw gross direct premium of Rs 5,770.3 crore, compared with Rs 5,428 crore.

Categories such as fire, marine and government health schemes saw fall in gross direct premiums. “Fire insurance premiums declined by approximately 10% Y-o-Y in December 2019 after 10-11 months of strong (25-60%) growth. Large private players, including ICICI Lombard (down 40% y-o-y), HDFC Ergo (down 50% y-o-y) and Bajaj Allianz GI (flat y-o-y), posted sharp decline in growth rates, except SBI General, which grew at ~30% y-o-y,”said the Kotak report.

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