General Insurance: Retail health, fire the bright spots in May

By: |
Published: June 22, 2020 3:45 AM

Standalone health insurers gained most; motor saw fall of 23% y-o-y; pressure in segment likely to continue

Negligible OEM volumes led to significantly lower volumes in both motor OD and TP segments.Negligible OEM volumes led to significantly lower volumes in both motor OD and TP segments.

General insurers reported 8% y-o-y decline in premiums (excluding crop) in May 2020 on the back of sharp 23% y-o-y decline in the motor business reflecting low OEM sales. Excluding motor and crop, premiums were up 5% y-o-y on the back of strong 22% y-o-y growth in fire and 25% y-o-y increase in retail health, indicating higher risk aversion and strong push through digital channels. Standalone health insurers reported 34% y-o-y growth in retail health.

Motor’s engine yet to start
Motor witnessed 23% y-o-y decline in growth in May 2020 – lower new sales (cars, 2W and CV volumes down >50% y-o-y) largely led to sharp decline in premiums. Renewals have likely increased from trough levels observed in May 2020 as traffic volumes gradually increase and with higher renewals from customers who utilised IRDAI relaxation on motor renewals till May 31, 2020. Negligible OEM volumes led to significantly lower volumes in both motor OD and TP segments.

Lower new sales and partial decline in renewals will continue to put pressure on motor premiums. Major private players like ICICI Lombard, Chola MS, Bajaj General and Tata AIG reported 22-32% y-o-y decline; SBI was, however, flat y-o-y. New-age players performed better than incumbents. Acko reported strong 89% y-o-y growth in motor premiums while it was down 14% y-o-y for Go Digit, better than industry average.

Retail health ramps up
Overall growth in the health business was moderate at 9% y-o-y (8% y-o-y in 2MFY21). Even as growth in retail health was strong at 25% y-o-y, muted 3% y-o-y growth in group health dragged overall health premiums. Standalone health insurers reported 11% y-o-y increase in health premiums while it fell 9% y-o-y for private players (PSU players recorded strong 29% y-o-y growth on the back of traction in non-retail policies). Growth in retail health most likely came on the back of increased risk aversion among customers due to Covid-19 and introduction of new dedicated Covid-19 products. Standalone health insurers reported strong 34% y-o-y growth in retail health in May 2020 (higher than 12% y-o-y in FY2020).

Fire continues to provide support
Fire insurance premiums grew 22% y-o-y in May 2020. This was likely driven by higher corporate renewals compared to retail businesses as underlying borrowers focus on cash conservation. Additionally, GIC had increased property reinsurance rates in March 2019 (average rise of 2X) for eight occupancies (comprising 35% of industry volumes) and, subsequently, for all 291 occupancies from January 2020. Large private players like Bajaj General (up 33% y-o-y), ICICI Lombard (up 51% y-o-y), and Tata AIG (up 55% y-o-y) posted strong growth.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Motherson Sumi rating: Maintain ‘buy’ with target price of Rs 117
2Jindal Steel rating: Buy — Raise target price to Rs 240
3Sensex, Nifty gain for third straight day on positive economic data from US, China