Growth in motor insurance business remains moderate

Overall growth in health premium was robust at 28% y-o-y, compared to YTD run-rate of 17%.

General Insurance companies reported 16% year-on-year (y-o-y) growth in premium in November 2019, up from 11% in October. Motor business continues to moderate on the back of weak OEM sales and moderating third-party (TP) business, while fire and health have helped offset the weakness. Large private players, ICICI Lombard (down 6% y-o-y, up 7% ex-crop) and Bajaj (up 8% y-o-y) and HDFC ERGO (down 30% y-o-y, up 8% ex-crop) posted weaker-than-industry numbers. Chola MS (up 14% y-o-y) was in line while SBI (up 40% y-o-y ex-crop) maintained robust performance.

Motor TP moderation continues

Motor segment reported 6% y-o-y premium growth in November 2019, moderating from the 15-20% growth seen in the last two months. The immediate reaction to new traffic penalties on motor TP premiums seems to have almost faded. Motor TP moderated sharply to 10% y-o-y (22% in October, 16% in YTD FY2020). OD business premiums were flat y-o-y in line with YTD run-rate after witnessing the first month of premium growth in October that was likely led by the festive season sales. Private sector continued to gain market share registering 11% y-o-y growth while PSUs reported a decline of 4% y-o-y.

Own-damage (OD) business was back to flat growth in November after registering 8% y-o-y growth in October 2019, reflecting weak OEM sales. Higher business in October was likely reflecting festive season sales. Among large private players, motor OD premium growth for Bajaj (15% y-o-y) and Chola MS (11% y-o-y) was better than the industry while ICICI Lombard posted 6% decline in premiums for the month-the reason for such a sharp decline for ICICI is unclear. Acko and Go Digit remained the fastest while SBI General maintained momentum at 60% y-o-y growth.

TP business moderated sharply to 10% y-o-y in November 2019 to levels well below YTD run rate of 16% y-o-y growth. Premiums had spiked in September (up 38% y-o-y) moderating to 22% in November. Private players posted 16% growth while growth for PSU players was muted (3% y-o-y). Go Digit (up 3X y-o-y) continued to witness robust traction. Among top private players, Bajaj (up 24% y-o-y), HDFC ERGO (up 27% y-o-y) and Chola MS (up 12% y-o-y) posted better-than-industry growth rates (10% y-o-y) while ICICI Lombard saw premiums declining 14% y-o-y in November 2019.

Rebound in health insurance

Overall growth in health premium was robust at 28% y-o-y, compared to YTD run-rate of 17%. Retail heath growth improved registering 18% y-o-y growth in November 2019 (12% y-o-y in YTD FY2020). This may be due to a better pricing environment.

Industry trends were similar, with standalone insurers gaining market share (retail health premiums up 30% y-o-y) compared to single-digit growth at both PSU and private general insurers. In group health, standalone insurers registered 80% y-o-y growth while growth at private general insurers moderated to 23% y-o-y (40% in 2020 YTD). PSUs continued to post declines.

Fire business robust

Premium growth in fire insurance was robust in November 2019 at 58% y-o-y, better than YTD 2020 run rate of 45% y-o-y. All major players delivered strong growth, except Bajaj at 10% y-o-y. GIC had increased reinsurance rates (average rise of 2X) in eight occupancies (comprising 35% of industry volumes) which will likely drive higher volumes and profitability in FY2020E. The run rate of 45% is higher, we would expect some moderation over the next few months.

 

Source : Financial Express

Date: 25-12-19

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s