Page 8 - The Insurance Times May 2025

according to the latest Financial Sec- General Insurers Struggle The stringent growth targets are prov-
tor Assessment Program (FSAP) report ing difficult to achieve, particularly
by the International Monetary Fund to Meet Motor Third-Party given the challenges in reaching
(IMF) and the World Bank (WB). Insurance Targets underserved vehicle segments.
The joint study, released in collabora- General insurance companies are fac-
tion with the Insurance Regulatory and ing challenges in meeting the motor Non-Life Insurance Sector
Development Authority of India third-party (TP) obligations mandated Sees Slower Premium
(IRDAI), acknowledges India's commit- by the Insurance Regulatory and De-
ment to adopting global best prac- velopment Authority of India (IRDAI), Growth in FY25
tices, including better regulations and primarily due to limited data access The non-life insurance sector witnessed
digital innovations. and low customer demand. a slowdown in premium growth during
"Most insurance companies are strug- FY25, although it crossed the Rs. 3 lakh
"The FSSA report acknowledges that crore milestone for the first time.
gling to meet the new TP obligations.
India's insurance sector is strong and
There is mounting pressure on insurers Data from the General Insurance Coun-
growing, with a significant presence in
to meet these new norms. We are try- cil reveal that gross direct premium
both life and general insurance. The
ing to deploy more people and re- underwritten by non-life insurers grew
sector has remained stable, supported
sources to meet these targets," said an 6.2% to Rs. 3,07,612 crore in FY25,
by better regulations and digital inno-
executive from a private sector gen- compared to Rs. 2,89,652 crore in
vations," IRDAI said in a statement.
eral insurer. FY24. In contrast, FY24 had recorded
The report praised India's progress in Under IRDAI's rules, companies with up a sharper 13% growth over FY23.
strengthening oversight, risk manage- to 2% market share in the motor TP General insurers' total gross written
ment, and governance. It recom- segment must grow their insured ve- premium increased 5.2% to Rs.
mended further steps toward imple- hicle base by 12.5% annually. Firms 2,58,092 crore, while standalone
menting risk-based solvency norms, with a 2-5% market share must achieve health insurers posted a robust 16%
where insurers would maintain capital 10% growth, those with 5-10% market growth, reaching Rs. 38,414 crore.
proportional to their risk exposure, share must expand by 7.5%, and com- A report by CARE Ratings attributed
thereby enhancing financial stability panies with over 10% market share the sector's moderation to the transi-
and protecting policyholders. must grow by 5% year-on-year. tion to the 1/n accounting rule, muted
passenger vehicle (PV) sales, and weak
Crop Insurance Business Sees Profits Surge, Compa- commercial insurance demand.
Among public sector insurers, New In-
nies Make a Comeback
dia Assurance posted a 4% rise in pre-
The crop insurance business has seen a resurgence, with companies record- mium income to Rs. 38,629 crore.
ing significantly higher profits over the last three years compared to the Meanwhile, ICICI Lombard, the second
preceding period. Favorable monsoon conditions and the adoption of new largest private general insurer, posted
technologies have been major contributors to this turnaround, prompting 8% growth, while HDFC Ergo saw a
some firms to re-enter the segment after earlier exits. 15% decline.
Official data show that between 2021-22 and 2023-24, companies collected
Rs. 90,698 crore in gross premiums while disbursing Rs. 56,325 crore in ICICI Lombard Q4 Profit
claims, yielding a gain of Rs. 34,373 crore. Farmers' contributions to gross Declines 1.9% Amid
premiums totaled Rs. 10,937 crore during this period.
Muted Premium Growth
By contrast, in 2018-19 to 2020-21, insurers made Rs. 15,013 crore in prof-
its after paying Rs. 78,616 crore in claims against Rs. 93,629 crore in pre- ICICI Lombard General Insurance re-
miums. "It is not that every insurance company is making a big profit. It ported a 1.9% year-on-year decline in
depends on its spread of business over the geographies and the crops se- net profit for Q4 FY25, posting Rs 509.6
lected," an official source said. crore compared to Rs 519.5 crore in
the corresponding quarter last year.
Notably, Chola MS re-entered the sector in 2023-24 but made limited prof- The dip was attributed to muted pre-
its, while Oriental Insurance incurred losses despite its return.
mium growth across business lines.
8 May 2025 The Insurance Times