Gross direct premium income (GDPI) of general insurers in the country is expected to touch ₹3.7 trillion by 2025-26, which will be an increase of 32% from the ₹2.8 trillion registered in 2023-24, ICRA said on Monday.
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In the current fiscal, GDPI of the general insurance companies is likely to increase 15.5% on the back of continued strong growth in the health segment, it said in a report. Health segment was also behind the robust growth of the insurance sector in FY24.
Private insurers growth is expected to remain strong and their profitability likely to improve supported by better underwriting performance. The growth for PSU insurers is likely to remain moderate because of the weak capital position. The combined ratio for PSU insurers will remain weak thereby impacting the net profitability.
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“With higher growth, market share of private insurers in terms of GDPI is likely to rise to 69% for FY25 and 71% for FY26. It was 68% in FY24. The health segment, which witnessed the strongest growth and accounted for almost half of the incremental GDPI of Rs.375 billion in FY-24, is likely to remain the key driver with the rising awareness of health insurance as well as increased ticket sizes, said Neha Parikh, V-P and Sector Head – Financial Sector Ratings of ICRA.
Besides the health segment, the more than 15% increase in GDPI of general insurers last fiscal was aided by a growth in the motor segment, which in turn was driven by the increase in the new vehicle sales – two-wheelers by 13.3% and passenger vehicles by 8.4%.
With high frequency and severity of natural catastrophic events in FY24, the net loss ratio of the fire segment was impacted. However, considering the reinsurance and low retention in this segment, the impact on the overall net loss ratio of the industry was manageable. Profitability for private players remained strong supported by improved investment income, which is likely to continue, ICRA said in a release.