Significant slowdown in general insurance sector, says Kotak report

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26 Aug, 2025 12:21

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The non-life insurance sector reported a weak premium growth in December 2019 due to a slowdown in motor and fire business.

According to a report by Kotak Institutional Equities, general insurance companies reported weak growth (~6 percent) in premiums (excluding crop business) in December 2019, down from 11-18 percent during the past five months.

This was a significant slowdown in the general insurance sector, it said.

The report said that a key reason for this was that the fire business finally slowed down. Fire business premiums were down around 10 percent in December 2019 on a year-on-year (YoY).

However, on year-to-date (YTD) basis this segment saw a 34 percent growth in April to December period compared to the previous fiscal.

It was only public sector players who pushed up the overall industry growth to around 13 percent on a YoY basis for the April to December 2019 period.

The country's largest general insurer New India Assurance posted a 14 percent YoY growth in premium to Rs 20,704.4 crore in the April to December period.

Among the private sector insurers, ICICI Lombard saw a 3 percent YoY drop in premiums in December 2019. SBI General Insurance saw a 20 percent drop in premiums.

Crop insurance has been a segment that has pulled down the growth of the non-life players in FY20. A rise in reinsurance costs has dissuaded private insurers from writing crop business, while the higher crop losses have also impacted the balance sheet. Public sector insurers, on the other hand, have gone deeper into writing crop business.

The Kotak report said that private players registered 1 percent YoY decline in overall premiums (up 7 percent excluding crop) in December 2019, significantly lower compared to YTD run-rate of growth of about 17 percent (~20 percent excluding crop).

PSU general insurers reported a better 12 percent YoY growth mainly led by crop insurance (3 percent growth ex-crop).

One segment that has beaten the slump in business is health insurance. This was reflected in the premium collection numbers of standalone health insurers. In the April to December 2019 period, pure health companies saw a 32 percent growth in gross direct income.