Motor TP and fire business have recovered, with private general insurance players leading in premium growth.
General Insurance companies reverted to moderate premium growth (10% year-on-year ex-crop) in January 2020, recovering from the 6% level of December 2019. Two key reasons: (1) Motor third party (TP) recovered (up 18% y-o-y vs 3-10% y-o-y in previous two months) and (2) fire business recovered (up 24% y-o-y vs -10% in December 2019).
Motor TP picks up
The motor segment reported premium growth of 15% y-o-y in January 2020, reverting to the 15-20% levels seen in September-October 2019 after the introduction of new traffic penalty rules. Motor TP (18% y-o-y growth in January 2020) drove the recovery after falling to 3% y-o-y growth in December 2019 from 38% in September 2019, now translating to 15% in YTD growth. Own damage (OD) business growth was steady at 10% y-o-y during the month. Private players continued to gain market share on YTD basis, reporting 18% y-o-y growth.
TP growth in January 2020 reverted to levels before September 2019 (when new traffic penalty rules were introduced). Private players posted 19% y-o-y growth, while PSU premiums grew 17% y-o-y. SBI General delivered the best performance (up by >800% y-o-y, though on a low base).
Own damage business growth was steady at 10% y-o-y in January 2020 compared to 2% growth in YTD FY2020. PSU players delivered the second consecutive month of y-o-y growth after eight months of contraction in FY2020, resulting in YTD FY2020 growth rate of -13% vs 9% for private players. Most large private players posted weaker-than-industry numbers, except ICICI Lombard and SBI General.
Retail health steady
Overall growth in the health business moderated to 3% y-o-y, compared to YTD run-rate of 15% due to weak business from government schemes. Retail heath maintained strong momentum at 17% y-o-y growth in January 2020 (~13% in YTD FY2020) while group health business was up 13% y-o-y (17% in YTD 2020). Market share movement trends continued, with standalone insurers gaining (health premiums up 29% y-o-y in January 2020) against general insurers.
Fire insurance premiums grew 24% y-o-y in January 2020, reverting closer to the ~25-60% growth levels in March-November 2019 after a decline of 10% in December 2019. Large private players including ICICI Lombard (up 37% y-o-y), HDFC Ergo General (up 60% y-o-y) and Bajaj (up 19% y-o-y) posted sharp recovery in growth rates from their December levels.
Edited extracts from Kotak Institutional Equities Research report