With the take-off of the Centre's crop insurance scheme, the sector has again emerged as the top growth premium earner for the general insurance industry.
Crop insurance growth rate was the highest at 131% for the first quarter of 2017-18.
Overall, the industry grew at a clipping 21%, with growth driven by gains in crop, motor and health, according to latest data with the IRDAI. Motor third-party insurance, which is mandatory, climbed 27%, while health posted solid growth of 20.9%. With the downturn in the shipping industry, marine premium fell 21% over last year, while logistics and shipping grew modestly by 3.6%.
For the non-life insurance industry growth usually comes from segments such as sale of automobiles, infrastructure investments and economic growth.
"But in the last two years, crop insurance has emerged as a major driver for growth in the industry. More than 10% of our premium now comes from crop-insurance and it has boosted our top-line growth," said an ICICI Lombard executive.
Crop insurance, has seen a new lease of life with the launch of the Pradhan Mantri Fasal Bhima Yogana (PMFBY) as its completely market-driven. Prior to this scheme, the National Agriculture Insurance Scheme (NAIS) was a government programme. Under the PMFBY, insurers quote market rates, but the farmer pays only 2% of sum insured as premium because of the government's subsidy.
"The non-life industry's growth is being fuelled primarily by the surge in crop and health insurance. For us crop insurance grew at 32% and we saw Rs 1,800 crore business from PMFBY. We are expecting to see more growth from this sector," said New India Assurance CMD G Srinivasan.
Events such as the severe drought in Tamil Nadu and floods in Uttar Pradesh have also led to more farmers taking up insurance.
"Last year, we saw a distinct increase in the number of farmers taking up crop insurance in places like Salem, Theni and Madurai," said an official from United India Insurance.
With higher automobile sales and upward forecasts for two-wheelers and cars, industry observers say that motor insurance will maintain its steady growth of 21% into 2018. For the April-July quarter of 2017, the domestic market as many as 10.26 lakh passenger vehicle units were sold, compared to 9.56 lakh units sold the previous year for the same quarter. Exports rose 12% to 2.47 lakh units.
"The demand for health insurance is high as the cost of medical inflation keeping going up. We expect health to grow at 22-25%. Fire also has seen reasonable growth. But in other areas like marine hull, the industry has been seeing losses. This is because of the cyclical nature of the industry — there is overcapacity currently in shipping and that is causing a lull," said Srinivasan.
Source - https://timesofindia.indiatimes.com
