General insurance industry to grow at 7 to 9% in FY22: ICRA

ANIUpdated: Friday, June 18, 2021, 03:04 PM IST
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The industry witnessed a 4% year-on-year growth to Rs 1.85 lakh crore. | Photo by Monstera from Pexels

The general insurance industry is expected to clock 7 to 9 percent growth in gross direct premium income during FY22, investment information firm ICRA has said.

This will be supported by growth in health segment and uptick in motor segment. "Despite underwriting losses, the sector is expected to report marginal return on equity (3 to 4.5 percent) largely supported by investment income which is highly regulated by the Insurance Regulatory and Development Authority of India (IRDAI)," said ICRA.

In FY21, the industry witnessed a 4 percent year-on-year growth to Rs 1.85 lakh crore. Public sector undertaking (PSU) entities were slower to adjust to an online mode of growth and the reliance on physical meetings was higher.

This resulted in a 2 percent y-o-y decline in business at Rs 71,800 crore while the private sector reported 8 percent y-o-y increase in gross direct premium income to Rs 1.13 lakh crore, said ICRA.

The health and personal accident business saw a growth of 12 percent in FY21. PSU entities had a muted growth in FY20 at negative 2 percent but saw a pick-up in growth during FY21 at positive 2 percent.

The motor insurance segment has traditionally been the biggest segment for general insurance industry but its share has gradually declined from 46 per cent in FY16 to 37 percent in FY21.

For FY21, the total motor business had a growth of 2 percent to Rs 67,800 crore due to COVID-19 lockdowns in CY2020 and lower new vehicle sales.

The fire insurance products accounted for 11 percent of the overall gross direct premium income during FY21. The total premium rose 27 percent in FY21 compared to a growth of 35 per cent in FY20.

The growth in FY20 was strong for both PSU and private sector players which increased market share in FY21.

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