1st June 2022
The general insurance industry in India, which grew by 5% in 2021, its slowest growth during the last decade, is projected to grow at a compound annual growth rate(CAGR) of 9.9% from INR2,172.03bn($29.39bn) in 2021 to INR3,484.35bn ($41.78bn) in 2026, in terms of gross written premiums (GWP), forecasts GlobalData.
GlobalData reveals that the sluggish performance of motor and property insurance lines due to the COVID-19 pandemic negatively impacted the general insurance industry in India in 2021.
Shabbir Ansari, senior Insurance Analyst at GlobalData, comments “ The General insurance industry in India is poised for a strong recovery in 2022, driven by increase in awareness and demand for health insurance and an economic recovery, which has helped automobiles and property demand reach its pre-pandemic levels.
Personal accident and health(PA&H) insurance was the largest segment, accounting for 33.8% of general insurance GWP in 2021. It grew by 14% in 2021 due to a surge in demand for health insurance policies following the COVID-19 pandemic. This trend will continue over the forecast period as the PA&H segment is expected to grow at a CAGR of 11.7% over 2021-26.
Motor insurance was the second-largest segment, accounting for 33.3% of GWP in 2021. It registered a sluggish growth of 2.7% due to lower vehicle sales following the economic slowdown and shortage of automobile chips globally. The motor insurance segment is expected to recover in 2022 and grow by 8.8%, in-line with recovery in automobile sales.
Furthermore, the expected increase in motor third-party liability(MTPL) premium rates later this year is expected to help motor insurance premium grow at a CAGR of 8.1% during 2021-26.
Property insurance was the third-largest general insurance segment with a 25.4% share of GWP in 2021. It declined by 5% in 2021 due to a halt in commercial construction activities and decline in housing demand due to COVID-19. There was decline in agriculture insurance premiums due to delays in claim settlements and release of subsidies.
Property insurance is expected to recover in 2022, driven by demand from residential and commercial segments as well as the government’s focus on infrastructure development. According to the Ministry of Statistics and Programme Implementation, the construction sector is expected to grow by 10.7% in 2022. This will support property insurance grow at a CAGR of 9.7% over 2021-26.
Marine, aviation and transit(MAT), Miscellaneous, Liability and Financial Lines insurance accounted for the remaining 7.5% share in 2021.
Ansari concludes “India’s general insurance penetration of 0.9% in 2021 is very low compared with South Korea(5.1%), Australia(3.5%), New Zealand(2.1%), Japan(1.8%) and Hong Kong(1.6%). As a result, there is ample opportunities for growth and expansion in the Indian general insurance industry.”
GloobalData Trends(133 articles)