Non-Life Industry is Expected to Grow at 10-11% and Cross the Rs. 85,000 crore Mark in FY 2015

Non-Life Industry is Expected to Grow at 10-11% and Cross the Rs. 85,000 crore Mark in FY 2015
 
The report attempts to take an all around view of the dynamics affecting the non-life insurance industry. It captures the key perspective of the insurance sector, the outlook for FY 2015, key statistics of the industry and dwells upon the pertinent challenges faced by the under-penetrated market. It also covers the regulatory changes that have taken place in the Indian insurance industry in the past one year.

Outlook 2015

• The Non life insurance industry is expected to grow at about 10 to 11% in FY 2015 and cross the Rs. 85,000 crore mark.
• India will continue to benefit from an overall soft market. The question in 2015 is not how low the rates may go, but how low they may remain. Corporates have benefited from a continuous soft market for roughly seven years now, raising questions around whether this is the “new normal” and whether rates will ever harden.
• In all probability with the passage of the Bill to raise the limit of Foreign direct investment from 26 to 49 percent this fiscal will see an inflow of foreign investments worth about US $ 2 billion within a year and this would be a potential lifeline for a sector starved of capital and squeezed by regulations.
• The need to operate economically and efficiently, comply with new and existing regulations and standards, meet competitive pressures, and take advantage of opportunities to grow will continue to exert considerable pressure on insurers.
• Insurers will continue to invest heavily into Information Technology to help enhance productivity as well as customer experience
• Health and Motor insurance will continue to be the growth engines
• The recent changes in the Motor vehicle act coupled with the Regulator easing its rules by introduction of long term (3 year) insurance will see a fall in the number of uninsured vehicles contributing to the growth in this line.
• The Health insurance segment has been making significant inroads with the Government run schemes gaining momentum. Health premium is likely to touch the Rs. 21000 crore mark this fiscal.
• General insurers are anticipating major claims from industries in Visakhapatnam following severe damage to property caused by cyclone Hudhud. Insurers are also saddled with large claims of about Rs. 800-900 crores from the flood-ravaged Jammu and Kashmir region. Additionally the major fire loss at Bhatinda refinery in the first quarter of 2014 has been pegged at about Rs. 650 crores. ​

Key Highlights of FY 2014:

• The General insurance industry in India has lost some of its steam during FY 2014 recording a growth of only 12.2% and touching a premium of Rs. 77,541 crores.
• On the life side, the industry seems to be slowly limping back to normalcy with new business premium recording a growth of 12% over the previous year.
• The industry combined ratio has come down to 113% this fiscal against 115% in FY 2013.
• The market share of PSU’s has decreased from 57% in FY 2013 to 55.8% in FY 2014.
• The highest growth segment-wise was recorded in the Motor segment at 14% followed by Health at 13%.
• Majority of the premium (36%) in India continues to be channelized by the ubiquitous insurance agent followed by direct business at 28% in FY 2014. During the same period, the percentage of premium collected through the broking channel stood at 22%; up from 21% in FY 2013.
• In the highly competitive, commoditized insurance market, price continues to be the major differentiator in clinching or losing a deal. Despite increase in customer awareness and involvement increasing, there remains a trust deficit between the customers and the industry participants, leading to low loyalty.