General insurers see premiums revival in June

General insurers reported 8% year-on-year (y-o-y) growth in premiums (excluding crop) in June 2020 led by 47% y-o-y growth in fire, robust 9% y-o-y growth in health and revival in motor premium to 1% y-o-y from 23-49% y-o-y decline over the past two months. Retail health was up 42% y-o-y; standalone health insurers reported 61% y-o-y growth. Among key players, SBI General Insurance reported strong growth across most segments while ICICI Lombard revived partially, led by motor and health. Bajaj was weak across segments.

Motor returns to positive

Motor witnessed muted 1% y-o-y growth in premiums in June 2020, improving from 23% y-o-y decline in May 2020 and 49% y-o-y drop in April 2020. Increase in new auto sales and higher share of renewals were likely drivers. Renewals have likely increased from trough levels observed in April 2020 as traffic volumes gradually increase and overall cash flows improve. In third-party (TP) business, private players’ premiums were muted at 1% y-o-y while it was up 8% y-o-y for PSUs. In the motor own damage (OD) segment, public sector undertakings (PSUs) were down 6% y-o-y compared to 2% y-o-y decline for private players. Overall muted environment for new auto sales (our auto analyst forecasts flat PVs, 15% y-o-y decline in two-wheelers and significant decline for commercial vehicles in FY2021) will continue to put pressure on motor premiums. Additionally, insurers will have to discontinue long-term motor OD policies post August 2020 resulting in partial hit on overall growth.

New-age players Acko and Go Digit reported strong 16% y-o-y and 14% y-o-y growth, respectively. SBI General Insurance reported stellar 48% y-o-y growth in motor led by 1X y-o-y jump in TP; the company reported better-than-industry growth for the second month in a row.

Strong traction in retail health

Overall growth in health business was moderate at 9% y-o-y (8% y-o-y in Q1FY21). Even as growth in retail health was strong at 43% y-o-y (25% in May and 4% in April), muted 12% y-o-y growth in group health and sharp 88% y-o-y decline in government health premiums dragged overall health premiums. Standalone health insurers saw 46% y-o-y increase in health premiums led by 61% y-o-y increase in retail health business. PSUs saw 18% y-o-y growth in retail health while private reported 41% y-o-y.

Growth in retail health was strong at 43% y-o-y, most likely on the back of increased risk aversion among customers due to Covid-19 and introduction of new dedicated Covid-19 products (sold through proprietary channels or third party aggregator platforms). Standalone health insurers reported strong 61% y-o-y growth in retail health in June 2020 (higher than 12% y-o-y in FY2020). Investment by health insurers in digital renewal of policies has likely paid off. Private players witnessed 41% y-o-y increase in retail health insurance premiums in June 2020.

Fire firing

Fire insurance premiums grew 47%

y-o-y in June 2020. This was likely driven by higher retention post rise in reinsurance rates by GIC. GIC had increased property reinsurance rates in March 2019 (average rise of 2X) for eight occupancies (comprising 35% of industry volumes) and subsequently, for all 291 occupancies from January 2020. Unlike other segments, PSUs saw a strong 68% y-o-y jump in fire insurance against 30% y-o-y growth for private peers.

Source: Financial Express