What’s driving growth in general insurance industry and how you can play it

India’s general insurance industry has seen a sharp resurgence in business activity with premium collections rising in double digits after a slow year ended March 31, 2021, when the pandemic impacted sentiments across the board. 

In the first nine months of the current year, non-life insurance industry has seen an 11% rise in gross premium collections compared with a 3.6% rise year-on-year in the April 2020-February 2021 period. 

While this shows robust growth, if we dig deeper, we get a distinct shift happening within general insurance categories. 

Health insurance, which comprised just over a quarter of the premium collections two years ago for the first 11 months of FY20, has overtaken motor insurance as a category to become the key driver among peers. 

Auto insurance premiums did turn around with a 3.6% rise in the first eleven months of the year, despite the poor industry condition due to supply issues of new cars and low demand for two-wheelers, compared with a 3.8% decline the year-ago period. But it was comprehensively beaten by the turbocharged growth in the health insurance segment. 

Health insurance premium collections shot up 25.6% this year, twice the pace last year. This has made it the key growth driver for the non-life insurance space, comprising a third of the total premiums. 

If we observe the various segments within health, for the first 11 months of the year, group health insurance continues to hold the largest share at 50.4%, followed by retail at 40.2%, government at 8.8% and overseas medical at 0.6%. 

Premium growth of standalone health insurers continues to be significantly higher than industry average. This has led to their share of the health insurance market rising. On the flip side, given their legacy, the general insurance companies still hold nearly three-fourth of the market. 

In effect, this leaves a large scope for standalone health insurance firms including the listed player Star Health, to gain in heft in the future. Star Health has lost nearly a fourth of its value since it went public. The company is the only standalone health insurer that is available to the public investors.

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