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Your Money: Health insurance likely to see strong growth in FY21

08-May-2020

General insurance companies reported 10% year-on-year (y-o-y) decline in premiums (ex-crop) in March 2020 on the back of Covid-19-related disruptions in the last two weeks of the month. Motor and health segments declined 7% and 5% y-o-y, respectively. Retail health was muted at 4% y-o-y. Most major private players slowed down (down 16% y-o-y) while standalone health insurers reported strong growth in premium (up 8% y-o-y).

Retail health holds on
Overall growth in the health business declined 11% y-o-y, compared to annual growth of 14% y-o-y. Standalone health insurers reported 9% y-o-y increase in health premiums while it declined 19% y-o-y for others (down 4% y-o-y for private players). Retail heath was muted at 4% y-o-y (up 12% y-o-y in FY2020). Standalone health insurers reported strong 12% y-o-y growth in retail health in March 2020 (up 26% y-o-y in FY2020). Private players witnessed 12% y-o-y decrease in retail health insurance premiums in March 2020 (down 7% y-o-y in FY2020). Post Covid-19, health insurance will likely report strong growth over the next few quarters. Standalone health insurers are placed in a sweet sport to capture incremental growth opportunities although business for private players will likely revive in FY2021.

Motor slows down
The motor segment witnessed 7% y-o-y decline in business in March 2020—lower new sales and renewals owing to lockdown-related disruptions largely led to sharp decline in premiums. Motor TP declined 5% y-o-y in March 2020 versus annual growth rate of 12%.

Private players reported 4% y-o-y decline in premium growth, while state-owned players’ premiums contracted 7% y-o-y. SBI General delivered the best performance (up by 1.7X y-o-y on a low base). Go Digit slowed down to 21% y-o-y and Acko was up 4% y-o-y. Among other large private players, only HDFC Ergo and Universal Sompo reported strong growth at 50% and 95% y-o-y, respectively.

Own damage business
PSU players’ business increased 9% y-o-y while it declined 14% y-o-y for private players. Most large private players posted weak numbers. Motor OD premium for Bajaj GI, Chola and ICICI Lombard declined 27% y-o-y, 26% y-o-y and 12% y-o-y, respectively in March 2020.

Fire premiums up in March
Fire premiums grew 12% y-o-y, lower than 24-50% y-o-y growth observed over the past two months largely due to lower business in the last two weeks of the month. ICICI Lombard was up 37% y-o-y, Chola MS up 21% y-o-y and TATA AIG up 67% y-o-y posted strong growth. GIC had increased property reinsurance rates in March 2019 for eight occupancies (comprising 35% of industry volumes) and subsequently for all 291 occupancies from January 2020. Hence, FY2020 growth was healthy at 35% y-o-y.

Source : Financial Express

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