The General Insurance Council arbitrates between insurers, Irdai, over ‘aggressive’ growth figures

The General Insurance Council is arbitrating between non-life insurers and IRDAI over growth figures suggested by the regulator, which some companies feel are “overly stretched targets”.

The Insurance Regulatory and Development Authority of India (Irdai) has circulated “temporary targets” for growth to all insurers to increase insurance penetration. This is the first time that Irdai has set premium hike guidelines for individual companies, which has shocked the industry.

The regulator has suggested to increase the collective premium of non-life insurance companies from 2.2 billion rupees in the financial year 2072 to 11 trillion 73 billion rupees by the financial year 2073-74. For state-run general insurers, the target during this period is from Rs 75,000 crore to Rs. 2.29 trillion, while for standalone health insurers, the premium offered has increased by around Rs 20,000 crore to Rs 1.51 trillion.

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“The General Insurance Council continues to mediate between Irdai and general insurance companies on the suggested increase figures,” said V Jagannathan, Chairman, Star Health & Allied Insurance.

There may be some “revised statistics” after discussion. “Or if the regulator says we have to comply with the data given to us, we will comply. Ultimately, whatever decision IRDAI takes, we agree with it,” he said. Jagannathan said it was possible for Star Health and Allied Insurance to achieve the suggested growth figures.

A top executive at a major general insurance company, speaking on condition of anonymity, said the growth figure was a “highly stretched target”.

“We have to see how to keep other quality standards in mind while pursuing such aggressive growth targets. Of course, as an insurer we always want to balance the two. It cannot be one at the cost of the other. And I am sure the regulator will understand,” said the executive.

General insurers say it is an exciting time for the industry as the regulator has embarked on several simplification and consolidation activities. However, some issues need to be discussed.

According to industry insiders, higher business growth for each company will ensure higher penetration, but future growth will depend on several factors. Whether insurance companies can achieve the growth figures suggested by Irdai will depend on factors such as underlying demand for insurance cover, macroeconomic growth and inflation going forward, they said.

In a recent report, CareAge reported a 16% growth in the non-life insurance industry at Rs 23,392.4 crore in July as against Rs 20,157.3 crore in July, after growing over 20% in the first three months of the current financial year. 2021. In the year-to-date period, the industry reported a growth rate of 20.8%, compared to 15.2% in the same period last year. The growth has been driven by health (particularly the group segment), motor, and crop insurance (which reversed the decline seen in the same period last year).

“Health insurance premiums have been the primary lever of the non-life insurance industry since the start of the COVID-19 pandemic. This led the segment to increase its market share from 32.8% for YTD FY21 to 38.3% for YTDFY23. The health sector grew by 21.9% for FY23, lower than the 33.4% growth seen in the same period of FY22,” CareEdge said in its report on August 19.

The motor insurance sector grew faster than health with a growth rate of 22.9% and reaching Rs 21,884.5 crore in the first four months of FY23. “This growth rate is much better than last year’s 4.8 percent. In the year-to-date FY23, motor OD grew 23% (vs 8.6% for the same period last year) and motor TP grew 22.8% (vs 2.8% for the same period last year). For July 2022, Motor OD and Motor TP premiums increased by 7.8% and 15.4% respectively. This increase can be attributed to last year’s low base and increase in motor TP tariff,” the report said.

According to FADA, the domestic sales of the automobile industry decreased by 7.8 percent this July. If two-wheeler sales are excluded, vehicle sales would have grown by 0.4 percent in July. July is generally considered to be the month before the festival season begins in August. However, concerns regarding inflation and supply chain disruptions remain due to ongoing geopolitical tensions.

In the first four months of FY23, crop insurance premiums were Rs. 635.8 crores, which is an increase of 14.8% compared to a decrease of 12.4% in the same period last year. This increase is due to the fact that the deadline for Kharif crop insurance is till mid-July. Private insurance companies increased their participation, while Indian Agricultural Insurance Company reported a decline during the review period.

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