Despite having a trend of slowdown in general insurance industry in this financial year, it is expected that industry is all set to grow significantly in next financial year in the country, pegging at a growth of desired insurance penetration of 1 per cent and it will jump the Rs 1,00,000 crore-mark with gross premium collection at Rs 1.1 trillion, according to a top official of General Insurance Council (GIC).
“It will take some more time, may be 2-3 years, for the industry to achieve the desired insurance penetration of 1 per cent. I believe that the industry will be able to cross the mark of Rs 1,00,000 crore and likely to achieve the gross premium collection at Rs 1.1 trillion by of 2016-17,” said G Srinivasan, GIC Chairman and Managing Director (MD), New India Assurance ltd.
As per data available with the GIC, penetration of general insurance in India has come down to 0.70 per cent in 2014-15 from 0.80 per cent in the previous fiscal despite an increase in per capita premium during the same period. But it has been observed that new norms under the Insurance laws (Amendment) Act, allowing foreign partners in insurance firms to hold up to 49 per cent stake from 26 per cent, have opened rooms for the growth of the industry.
When asked about the growth scenario of the sector, taking the cue of 1 lakh crore-mark penetration in the country by next fiscal, Chief Executive of a general insurance company said, “Recently, Germany-based ERGO Insurance hiked its stake from 25.84 per cent in HDFC ERGO General Insurance to 48.74 per cent, showing a positive environment in the insurance penetration here. As the business growth prospects are good in India due to the Government-initiated ‘ease of businesses’, we hope more will join in the race, hiking their stakes in the near future. Despite having high competition in the industry, I think growing above 1 lakh crore-mark penetration is not a tough job for us in next 2-3 years time.”
However, as per latest data, the general insurance density - per capita premium - went up slightly from Rs 664 to Rs 686 last fiscal. In fact, the insurance density has increased threefold from Rs 235 to Rs 686 over a decade. But the decline in general insurance penetration was observed due to small and ticket size premiums and lower economic growth.
“The dip in general insurance penetration was due to lower economic growth and premium rates are small in the country and hence we should look at how many people are getting insured,” said Srinivasan, adding that though the covers are good in numbers, the premiums are too small in size.
On the prospects of the Pradhan Mantri Suraksha Bima Yojana (PMSBY), a social security scheme, which was launched early this year, Srinivasan said, “It has done well in increasing the number of people covered in the scheme. As on November 2015, about 9.25 crore people have been brought the cover under the PMSBY scheme. However, it has not helped much in increasing premium collection.”
However, gross direct premium income of the general insurance of all 28 players, including five exclusive health insurance players, increased from Rs 26,110 crore in 2006-07 to Rs 84,686 crore in 2014-15, revealed the GIC data.
“The capital employed by general insurers increased to Rs 43,546 crore from Rs 16,527 crore during past one decade, while investments have also gone up by more than fourfold - from Rs 31,584 crore in 2006-07 to Rs 1,39,887 crore in 2014-15,” it said.
The number of offices, it added, has increased from 5,112 to 10,381, while policies issued have more than doubled from 6.04 crore to 12.60 crore during the past decade. Moreover, net retention ratio also increased from 67.6 per cent to 78.90 per cent during the period.