Private insurers continue to gain market share; solvency position of PSU insurers worsens: ICRA
ICRA projected that the insurance industry's gross direct premium would cross ₹3 lakh crore mark by FY2025
PremiumCredit rating agency ICRA has claimed that private insurers have continued to gain market share in the country but the solvency position of the PSU insurers has deteriorated.
Further, ICRA projected that the insurance industry's gross direct premium would cross ₹3 lakh crore mark by FY2025 as against ₹2.4 lakh crore at the end of March 2023.
According to the report, private insurers' combined ratio is likely to improve, and Return on Equity (RoE) is expected at 11.2-12.8% in FY2024 and 12.5-13.9% in FY2025.
However, most of the PSU insurers are expected to witness a high combined ratio resulting in net losses, though it will be lower compared to the last few years, ICRA's report highlighted.
It said that the capital requirement of three PSU general insurers (excluding New India) is estimated at a sizeable ₹172-175 billion to meet a solvency of 1.50 times as of March 2024, assuming 100% forbearance from the regulator.
Further, the report said that the health segment witnessed the sharpest growth, accounting for 48-50% of the incremental GDPI in FY2023. The auto segment also picked up pace after the Covid pandemic.
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-pandemic, ICRA said.
However, the underwriting losses of public sector insurers increased because of wage revision and payment of associated arrears.
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