MUMBAI: Insurance industry’s gross direct premium income (GDPI) is likely to exceed `3 lakh crore by financial year 2024-25 (FY25)as against Rs 2.4 lakh crore at the end of March 2023, according to a report released by ICRA.
Private insurers’ combined ratio will improve and return on equity (RoE) is expected at 11.2-12.8% in FY24 and 12.5-13.9% in FY25, ICRA said in a report. Most PSU insurers are expected to witness high combined ratio resulting in net losses, though it will be lower compared to last few years, said the investment information and credit rating agency.
The industry’s GDPI saw a sharp 17.2%year-on-year (YoY) growth in FY23 to Rs 2.4 lakh crore with the resumption of economic activity after the waning of Covid-19 infections. In absolute terms, the report said the incremental growth in the GDPI was at an all-time high of Rs 35,000 crore in FY23 higher than Rs 20,000 crore in FY22 and Rs 7,000 crore in FY21.
The health segment witnessed the sharpest growth, accounting for 48-50% of the incremental GDPI in FY23, driven by rising awareness regarding health insurance. The motor segment, which was subdued due to the pandemic-related lockdowns, also picked up pace, it said.
The net claims ratio improved with the normalisation of health claims, partially offset by higher claims in the motor segment with increased vehicle movement, post the pandemic, it said. Though the claims ratio improved, the underwriting losses of public sector insurers increased because of wage revision and payment of associated arrears, it said.