General Insurance Council mediates between insurers, Irdai on ‘aggressive’ growth figures.

The General Insurance Council is mediating between non-life insurers and Irdai on the growth figures suggested by the regulator, which some companies feel are “very stretched targets”.

The Insurance Regulatory and Development Authority of India (Irdai) has circulated “interim targets” for growth to all insurers to increase insurance penetration. This is the first time that Irdai has prescribed premium growth guidelines for individual companies, a move that surprised the industry.

The regulator has suggested raising the collective premium of non-life insurance companies to Rs 11.73 trillion for FY27 from Rs 2.20 trillion from FY22. For state general insurers, the target is to increase it from Rs 75 billion to Rs 2.29 trillion over the period, while for autonomous health insurers, the suggested premium increase is 1, 51 trillion rupees from about 20 billion rupees.

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“The General Insurance Council continues its mediation work between the Irdai and the general insurance companies on suggestive growth figures,” said V Jagannathan, chairman, Star Health and Allied Insurance.

After the discussions there could be some “revised figures”. “Or if the regulator tells us that we must follow the figures it has given, we will follow it. Ultimately, whatever decision Irdai takes, we agree,” he said. Jagannathan said it is possible for Star Health and Allied Insurance to achieve the suggested growth figures.

A senior executive at a major general insurance company, however, said on condition of anonymity that the growth numbers are “very stretch goals.”

“We need to see how to take into account other quality parameters while pursuing such aggressive growth targets. Of course, as an insurer we always want to balance the two. It cannot be one at the expense of the other. And I’m sure the regulator will understand that,” the executive said.

General insurers said it is an exciting time for the industry as the regulator has initiated many simplification and consolidation activities. However, some topics need discussion.

According to industry experts, higher business growth for each company will ensure greater penetration, but future growth will depend on several factors. Whether insurance companies can achieve the growth figures suggested by Irdai will depend on factors such as underlying demand for insurance coverage, macroeconomic growth and inflation going forward, they said.

In a recent report, CareEdge said that after growing over 20% in the first three months of the current financial year, the non-life insurance industry has moderated, registering 16% growth in July for to reach Rs 23,392.4 crore compared to Rs 20,157.3 crore in July. 2021. In the period to the year, the industry recorded a growth rate of 20.8%, compared to 15.2% in the same period last year. This growth has continued to be driven by health (especially the group segment), auto and crop insurance (which reversed last year’s decline during the same period).

“Health insurance premium has been the main lever of the non-life insurance sector since the start of the Covid-19 pandemic. This has resulted in the segment increasing its market share from 32 .8% for YTD FY21 to 38.3% for YTDFY23 The healthcare segment grew by 21.9% in the year before FY23, which is lower than the 33.4% growth observed during the same period in FY22,” CareEdge said in its Aug. 19 report.

The auto insurance segment has grown faster than health in the first four months of FY23, registering a growth rate of 22.9% to reach Rs 21,884.5 crore. “This growth rate is significantly better than last year’s 4.8%. In the year before FY23, the OD engine grew by 23% (compared to 8.6% in the same period of last year) and Motor TP increased by 22.8% (compared to 2.8% in the same period last year). For July 2022 Motor OD and Motor TP premiums grew by 7.8% and 15.4%, respectively. The growth can be attributed to a low base last year and an increase in Motor TP rates,” the report said.

According to Fada, domestic sales in the auto industry fell 7.8% year-on-year this July. Excluding two-wheeler sales, vehicle sales would have posted a marginal increase of 0.4% in July. July is generally considered a lean month before the start of the festival season in August. However, concerns about inflation and supply chain constraints due to ongoing geopolitical tensions remain.

Crop insurance premiums increased by Rs 635.8 crore in the first four months of FY23, up 14.8% against a decline of 12.4% in the same period of l ‘last year. The increase can be attributed to the fact that the deadline to secure kharif crops was till the end of July. Private insurers have increased their share, while Agriculture Insurance Company of India registered a decline during the period under review.

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