The insurance industry is expected to net gross direct premium income (GDPI) of about Rs 3 lakh crore by FY25 as against Rs 2.4 lakh crore at the end of March 2023, a report said.
Private insurers' combined ratio is likely to improve and Return of Equity (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 report.
Most PSU insurers are expected to witness high combined ratio resulting in net losses, though it will be lower compared to last few years, it said.
Moreover, it said, the capital requirement of three PSU general insurers (excluding New India) is estimated at a sizeable Rs 172-175 billion to meet solvency of 1.50 times as of March 2024, assuming 100 per cent forbearance from the regulator.
The industry's GDPI grew a sharp 17.2 per cent year-on-year (YoY) in 2022-23 to Rs 2.4 lakh crore with the resumption of economic activity after the waning of Covid-19 infections.
In absolute terms, the report said, the incremental growth in the GDPI was at an all-time high of Rs 35,000 crore in FY2023 (higher than Rs 20,000 crore in FY2022 and Rs 7,000 crore in FY2021).
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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, it said.
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 the pandemic, it said.
Although the claims ratio improved, the underwriting losses of public sector insurers increased because of wage revision and payment of associated arrears, it said.
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