NEW DELHI: After going through a period of muted growth due to Covid-19 induced disruptions, the non-life insurance sector is set to stage comeback. Helped by supportive regulations, improving macro environment and profitability, non-life insurers are expected to see robust growth in premium income and a fall in loss ratio next year.
“Loss ratio for non-life insurers peaked during FY-22 to 92 % due to Covid-19 related claims but moderated to 87% in the first half of FY23. The loss ratio is further likely to reduce to 85%-86%, going forward,” said Neha Kadiyan, associate director, Care ratings. “On profitability part, driven by improvement in loss ratio along with rising yield on debt investments, overall profitability is expected to improve for the sector,” she added. “Impacted by Covid-19, the gross direct premium income (GDPI) had slowed to single-digit in FY21, but it rebounded through increased demand for health insurance products in FY22. GDPI is likely to grow 13% to 15% over medium term, driven by health and motor insurance segment,” she added.
Several initiatives launched by the Insurance Regulatory and Development Authority (IRDA) this year will play a crucial role in fueling growth of non-life insurers. IRDA announced several initiatives in 2022 including launch of Bima Sugam - an online marketplace that will house all companies selling life and non-life insurance on a single platform. IRDAI has plans to make regulations lighter and reduce compliance burden on insurers.
“2022 has been a year marked with milestone regulatory changes and significant government initiatives, which have presented the insurance industry with robust opportunities, policy support, various strategic partnerships and increased access to strategic investments. Recent announcements by IRDA ensures giant strides in welcoming capital flows into the industry, along with ease in product innovations and enhanced distribution footprint,” said Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance Company. “The year 2023, driven by reforms and burgeoning ecosystem of digital health, emergence of digital intermediaries across entire customer lifecycle, increased insurance awareness and participation from ‘Bharat’ and SME sector adoption of insurance, will accelerate across segments,” he added.