Private insurers continue to gain market share: ICRA

New Delhi [India], May 15 : Rating agency ICRA expects the industry's gross direct premium income (GDPI) to exceed Rs 3 trillion by 2024-25 (FY2025), up from Rs 2.4 trillion in FY2023.

Private insurers' combined ratio is likely to improve and return on earning (RoE) is expected at 11.2-12.8 per cent in FY2024 and 12.5-13.9 per cent in FY2025, ICRA said in a statement.

Gross direct insurance premiums (GDPIs) are defined as gross insurance premiums for direct insurance for a reporting country, divided by the population, representing the average insurance spending per capita in the country.

Most public sector undertaking (PSU) insurers are expected to witness high combined ratio resulting in net losses, though it will be lower compared to the last few years, according to ICRA. Moreover, the capital requirement of three PSU general insurers (excluding New India) is estimated at a sizeable Rs 172-175 billion to meet solvency of 1.50x as of March 2024.

Neha Parikh, Vice-President and Sector Head - Financial Sector Ratings, ICRA, said: "ICRA expects the GDPI to expand by a healthy 13-15 per cent to Rs 2.73-2.78 trillion by FY2024 and further by 12-14 per cent to Rs 3.06-3.17 trillion by FY2025.

Driven by the improving distribution network and better financial profile, the market share of private insurers is expected to expand further to 70 per cent of the GDPI in FY2025 from 66 per cent in FY2023 and 50 per cent in FY2017."

The industry's GDPI grew a sharp 17.2 per cent year-on-year in FY2023 to Rs 2.4 trillion with the resumption of economic activity after the waning of Covid-19 infections.

In absolute terms, the incremental growth in the GDPI was at an all-time high of Rs 350 billion in FY2023 (higher than Rs 200 billion in FY2022 and Rs 70 billion in FY2021).

The health segment witnessed the sharpest growth, accounting for 48-50 per cent of the incremental GDPI in FY2023, driven by rising awareness regarding health insurance. The motor segment, which was subdued due to the pandemic-related lockdowns, also picked up pace.

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