{"id":30086,"date":"2023-05-16T12:34:22","date_gmt":"2023-05-16T07:04:22","guid":{"rendered":"https:\/\/flattrade.in\/kosh\/?p=30086"},"modified":"2023-05-16T12:45:48","modified_gmt":"2023-05-16T07:15:48","slug":"private-insurers-to-gain-market-share-amid-worsening-solvency-position-of-psu-insurers-report","status":"publish","type":"post","link":"https:\/\/flattrade.in\/kosh\/private-insurers-to-gain-market-share-amid-worsening-solvency-position-of-psu-insurers-report\/","title":{"rendered":"Private insurers to gain market share amid worsening solvency position of PSU insurers: Report"},"content":{"rendered":"\t\t
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The insurance industry\u2019s gross direct premium income (GDPI) is likely to exceed Rs. 3 trillion by FY2025, up from Rs. 2.4 trillion in FY2023, according to ICRA rating agency. The market share of private insurers is expected to expand further to 70% of the GDPI in FY2025 from 66% in FY2023 and 50% in FY2017, helped by the improving distribution network and better financial profile, the rating agency stated.\u00a0<\/p>

The rating agency said that the insurance industry witnessed a GDPI growth of 17.2% YoY to Rs 2.4 trillion in FY2023 as economic activity rebounded after the pandemic. ICRA expects the GDPI to expand by 13-15% to Rs 2.73-2.78 trillion by FY2024 and further by 12-14% to Rs. 3.06-3.17 trillion by FY2025. The incremental growth in the GDPI stood at an all-time high of Rs 350 billion in FY2023 compared with Rs 200 billion in FY2022 and Rs 70 billion in FY2021.<\/p>

The health segment witnessed the sharpest growth, accounting for about 48-50% of the incremental GDPI in FY2023, due to rising awareness regarding health insurance. The motor segment, which was subdued due to the pandemic-related lockdowns, also picked up pace.<\/p>

The report further said that private insurers\u2019 combined ratio is likely to improve and Return on Equity (RoE) is expected at 11.2-12.8% in FY2024 and 12.5-13.9% in FY2025. The rating agency also said that most state-owned insurers are expected to witness high combined ratio resulting in net losses, even though it will be lower compared to last few years. The combined ratio is calculated as: net claims\/net premium earned + expenses\/net premium written.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Solvency Profile <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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While the solvency position of private insurers remains comfortable in relation to the regulatory requirement of 1.50x, the high net losses incurred by PSU insurers (excluding New India) led to a negative solvency ratio of 0.25x (excluding fair value changes on investments) as of December 2022.<\/p>\n

The capital requirement of three PSU general insurers (excluding New India) is estimated at Rs 172-175 billion to meet solvency of 1.50x as of March 2024, assuming 100% forbearance on Fair Value Change Account (FVCA), which is the unrealised gain on equity investments and not allowed to be included in the solvency calculation. The solvency of PSU insurers has previously been supported by infusions by the Government of India, which provided Rs. 174.5 billion over a 3-year period till FY2022.<\/p>\n

Besides, ICRA expects the combined ratio of PSU insurers to remain weak at 125-127% in FY2024, though better than 133-134% (estimate) in FY2023, while select private players in ICRA\u2019s sample set are expected to report a combined ratio of 105-106% in FY2024 (106-107% in FY2023E).<\/p>\n

Meanwhile, the net claims ratio improved with the normalisation of health claims, buts it was partially offset by higher claims in the motor segment with increased vehicle movement, post the pandemic. Although the claims ratio improved, the underwriting losses of public sector undertaking (PSU) insurers increased because of wage revision and payment of associated arrears, ICRA said in the report.<\/p>\n

As far as private insurers are concerned, profitability is likely to be supported by investment income with the adjusted return on equity (RoE) expected to improve to 11.2-12. 8% in FY2024, the rating agency added.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\tOpen a Free Demat Account<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"The insurance industry\u2019s gross direct premium income (GDPI) is likely to exceed Rs. 3 trillion by FY2025, up…","protected":false},"author":5,"featured_media":30087,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"csco_post_video_bg_volume":false,"footnotes":""},"categories":[65],"tags":[46,43,95,78,139,48,26,692,144,693,558,788,77,47,24,23,84,21],"class_list":{"0":"post-30086","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-industry","8":"tag-market-news","9":"tag-market-update","10":"tag-markets","11":"tag-nifty","12":"tag-nifty-futures","13":"tag-nifty-today","14":"tag-nse","15":"tag-opening-bell","16":"tag-options","17":"tag-pre-market","18":"tag-premium","19":"tag-premium-income","20":"tag-sensex","21":"tag-sensex-today","22":"tag-share-market","23":"tag-stock-market","24":"tag-stocks","25":"tag-trading-account","26":"cs-entry","27":"cs-video-wrap"},"yoast_head":"\nPrivate insurers to gain market share amid worsening solvency position of PSU insurers: Report - 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