An analysis by AIP Analytics on the basis of industry figures, as compiled by the General Insurance Council, has shown the domestic general insurance industry with 24 general insurance players including four public sector companies, five stand-alone health players and two specialised players) Agriculture Insurance Company(AIC and Export Credit Guarantee Corporation(ECGC) had losses of Rs 1403 crore in FY 2019-20.
In a remarkable development, despite paying a huge sum as claims and facing other challenges and constraints triggered by Covid- 19 Pandemic through out the fiscal, led by New India Assurance(NIA), the Indian general insurance industry with 31 players,has seen its net profit zooming almost 300 per cent year on year(y-o-y) to Rs 3,868 crore in in Fy 2020-21.
NIA, the largest Indian multinational general insurer, had recorded a net profit of Rs 1605 crore in FY 2020-21 as compared to Rs 1417 crore in Fy 2019-20.Its gross global premium had expanded by 6 per cent y-o-y to Rs 33,046 crore (Rs 31,573 crore of gross Indian premium) in Fy 2021.
An analysis by AIP Analytics on the basis of industry figures, as compiled by the General Insurance Council, has shown the domestic general insurance industry with 24 general insurance players including four public sector companies, five stand-alone health players and two specialised players) Agriculture Insurance Company(AIC and Export Credit Guarantee Corporation(ECGC) had losses of Rs 1403 crore in FY 2019-20.
Though, the industry witnessed a massive disruption due to the suden onset of Covid-19 Pandemic since March 2020, in terms of key parameters like gross premium, number of policies issued, underwriting losses/ profit, Combined ratio, gross claims,no of employees and foreign direct investment and investment in infrastructure and social sectors, the industry has seen a significant improvement during fY 2020-21.
With a gross premium of over Rs 2 trillion, showing a growth of 9 per cent, out of total 31 players,17 players including two specialised insurers AIC(along with underwriting profit) and ECGC have achieved healthy net profits including in FY2020-21.
The industry has issued 2,46 crore policies in FY 2021 against 2,40 core policies in Fy 2010.
The industry’s total underwriting losses have dipped 17.24 per cent y-o-y to Rs19,416 crore during the reporting period.
However, industry analysts have preferred to describe the “turnaround in fortunes” of the industry in Fy 2021 as the result of many one off factors and has already shown signs of reversal in first six months of FY 20222..
“While the Fy 2020-21 results of the Industry point to a turnaround in fortunes, a much deeper analysis shows the same were driven by a few one off factors: motor claims were low as India witnessed a prolonged lockdown , agriculture had a good year , property insurance prices remained stable and while the first wave of covid was faced the insurance industry losses were relatively benign due to a variety of reasons,” said analysts.
The first half of 2021- 22 has definitely seen a reversal in several aspects.Primarily the second wave has hit the helath insurance portfolio much harder , motor insurance has seen more intense price competition due to lower demand of new vehicles while at the sametime There is no lockdown effect this time. Prices for small and medium risks have plummeted in the property space . All These point towards a much worse performance of
the Indusrty going forward,”cautioned the analysts.
However, good results in agriculture during the year might mitigate some,they said.
“it is too early to conclude on the overall positiive performance of the industry during the year. Overall the industry seems to have lost pricing discipline on many lines of business and the effect of increased rates of health portfolio remain to be seen in terms of how It is played out or sustained,” they added.
Analysts have said the underwriting losses of the industry have fallen as the three PSU general insurers, National Insurance Company(NIC), United Insurance(UII) and Oriental Insurance Company(OIC) have managed to bring down their such losses substantially, .
While Kolkata base NIC’s underwriting losses have plunged from Rs 5,759 crore in Fy 2019-20 to Rs 2484 crore in Fy 2020-21, Chennai based UII’s underwriting losses have gone down to Rs 3217 in Fy 2020-21 from Rs 4,487 crore in FY 2019-20. Similarly, Delhi based OIC’s underwriting losses have plummeted to Rs 3,707 crore in Fy 2020-21 from Rs 4,197 crore in Fy 2019-20.
All the three PSU general insurers(NIC with a net loss of Rs 514 crore( Rs 4,108 crore loss in 2019-20), UII with a loss of Rs 984 crore (Rs 1485 crore loss in 2019-20) and OIC with a loss of Rs 1519 crore, (Rs 1524 crore loss in Fy 2019-20) continue to be in red in Fy2020-21.
Five players, including Baja Allianz General Insurance (96.89 per centage ), ICICI Lombard General Insurance(99.82 per centage), SBI General Insurance(95.71 per centage), Care Health Insurance(92.89 per centage) AIC(94.35 per centage) have recorded positive combined ratios in FY2020-21.
Any combined ratio, calculated by dividing the sum of claim-related losses and expenses by earned premium, below 100 per cent means, the insurer is making an underwriting profit and any net profit despite having an underwriting loss means, an insurer has investment income which is larger than the underwriting losses.
Major private sector general insurers like ICICI Lombard(Rs 1473 crore in FY 21 vs Rs 1193 in FY 20) Bajaj Allianz(Rs 1330 in Fy 21 vs Rs 998 crore in FY 2020), HDFC Ergo(Rs 591 crore vs Rs 447 crore), SBI General(Rs 541 cr vs Rs 411 crore)Tata AIG(Rs447 crore vs Rs 334 crore), IFFCo Tokio(Rs 319 vs Rs 204), Reliance General(Rs 208 vs Rs 259 crore) have remained profitable in FY 2021.
Among exclusive health insurers except Delhi based Care Health Insurance, which has posted a net profit of Rs 102 crore(against Rs 65.89 crore in Fy 2020), rest of the four companies have suffered losses in Fy 2021.Even IPO bound Star Health Insurance which had a profit of Rs 263 crore FY 2020,has turned loss making with a net loss of Rs 1085 crore in FY 2021.
Shriram General Insurance Company,with a relative small premium base of Rs 2,139 crore (Rs 2,466 crore in Fy2020) and combined ratio of 104 per cent(90.9 percent in Fy2020) has achieved a net profit of Rs 592 crore (Rs 741 in Fy2020) in FY 2021.The company had underwriting losses of Rs 55 crore(Rs 199 crore underwriting profit in Fy2020).
In another interesting development, when a lot of insurers are exiting or reducing their crop business because of the high losses from the portfolio, state owned AIC with a gross premium of Rs 12,052 crore(Rs9,361 crore in Fy 2020), has for the first time made an underwriting profit of Rs 213 crore(with a combined ratio of 94.35 per cent) and a net a profit of Rs 490 crore(Rs 176 crore in FY2020) in Fy 2021.It had an incurred claim ratio of 93.6 per cent in FY 2021.In Fy2020, AIC’s underwritimng losses were at Rs 303.21 crore.
State owned ECGC, with a total premium of Rs 1062 crore (Rs 1075 in Fy2020), has earned a net profit of Rs 460 crore(Rs 323 crore in FY 2020) in FY 2021.With a combined ratio of 137 per cent(157 per cent in Fy 2020) it had underwriting losses of Rs 418 crore (Rs 432 crore in FY 2020) in FY 2021.
The gross claims of the industry have fallen to Rs 1,48.163 crore in FY 2020-21 from Rs 1,52.938 crore in 2019-2020. However the net claims of the industry have gone up from Rs 1,08.314 crore in Fy 2019=20 to 1,11.206 crore in FY2020-21
The number of employees, the insurers have, rose from 1,41.611 in FY 20219 to 1,42,944 in 2020 while the number of offices they have increased from 11,180 in 2019 to Rs 11,245 in Fy 2020.
The four PSUs, out of which three(OIC, UII and NIC) are currently facing a lot of financial challenges in terms of solvency and profitability impacting their day to day business, have slashed their workforce to 49,149 in Fy2021 from 63,746 in Fy 2020.
All the four PSU general insurers have also closed down some of their offices. Even private sector general insurers like ICICI Lombard General, Reliance General and Tata AIG have also shut down a few of their offices.
Private sector general insurers like ICICI Lombard,Bajaj Allianz, Reliance have also cut down their manpower to some extent.
Total capital of the industry has soared by almost 40 per cent y-o-y to Rs 89.076 crore while the inflow foreign direct investment (FDI) to the industry has risen by 30 per cent y-o-y to Rs 6,111 crore in FY2021.
Total infrastructure and social sector investment by the industry has surged by 15 per cent y-o-y to Rs 69,867 in Fy 2021