Research Notes - Insurance
T
he general insurance industry reported
moderate premium growth of 16% in
May 2019 (15% YTD). Motor insurance was
weak at 8% while premium for the month
was up 8% yoy, better than 1% in April
- This this was driven by 11% growth in
motor TP, according to Kotak Institutional
Equities’ report on general insurance.
Motor OD (Own Damage) is weak.
Motor OD segment reported 4% growth in
premium, versus a 5% decline in April 2019
(flat in FY2019). While private players were
up 13%, PSUs were down 12% yoy. Digit
and Chola up 27%, ICICI Lombard, up 17%,
Reliance, up 24% and Universal Sampo up
38% and most of them benefitting from a
lower base and increasing franchise with
dealers. On the other hand Bajaj Allianz up
4% and SBI General down 15% indicated
restrained business due to declining
profitability in this segment.
Motor Third Party has been somewhat
better. Growth in motor TP premium was
somewhat better at 11% yoy. While PSUs
were down 5%, private players were strong
at 28% yoy, gaining market share by 750
bps to 55%. Bajaj Allianz was up 18% yoy,
largely focusing on CV (38% of total motor
premium). Higher growths among other
players - Chola at 29%, ICICI Lombard at
20% track their growth in the OD segment,
reflecting comprehensive insurance plans.
IRDA raised TP tariffs in the last week
of May.H
ealth reported high growth at 28%,
largely from group and government
business; retail health was up only 7% yoy.
Health insurance premiums were up 28%
yoy, up from 16% in April 2019. Private
sector was up 28% yoy and specialized
health insurance companies were up 61%
yoy. PSUs up 11% yoy lost 600 bps market
share to 40%. Higher growth during the
month was largely from two players viz.
Birla (up 108% yoy) and Religare (215%
yoy). Excluding these two players, overall
health segment growth was 21% in May
(15% in April) i.e. in line with FY2019. Birla
has reported 71% growth in retail health
and 176% growth in group health. Religare
has delivered 34% growth in retail health
and 30% growth in group health which has
high driven its growth.
Overall retail health premium was up
just 7% yoy. Chola MS reported 5% decline
in retail health after 80% growth in April;
this is the segment it is focusing on in
FY2020E and hence a decline during the
month is surprising. As for ICICI Lombard,
some of the B2C business was reclassified
under B2B, resulting in an 80% decline in
retail business and 111% growth in group
health. SBI continued to grow aggressively
and reported 165% growth in retail
health (98% growth in FY2019, 230% in
April 2019).Overall group health business was up
42% yoy. Bajaj was up 40% and Chola up
77% yoy; according to Bajaj, higher volumes
in this business will improve its negotiating
power with partners which will eventually
benefit its retail business. SBI Life was
muted with 11% growth (10% decline in
FY2019, 43% in April 2019).
Government business was up 94% yoy
(up 85% in FY2019, 16% decline in April).
This was largely driven by Religare and
Bajaj. Bajaj has tied up with 3 states - J&K,
Chhattisgarh and Mizoram; the latter two
are profitable and will continue to drive
volumes in FY2020E as well.G
rowth in premium from the fire
segment was high at 61% in May and
51% in April 2019. This compares with 25%
in March 2019 and about 12% in FY2019.
The increase may be due to (i) higher
volumes of business in commercial lines
YTD; it is however not clear if this can be
sustained throughout the year as business
environment anyway remains weak and (ii)
rise in reinsurance rates in eight segments
by GIC (comprising about 20-25% of total
business) in this segment.
Private players fared better with 66%
growth during the month as compared to
56% for PSUs. Higher volumes benefitted
ICICI Lombard, up 51% yoy as compared to
about 18% in FY2019. Higher volumes due to
increase in bancassurance partnerships that
are driving business in the MSME segment.
Fire was up 61% yoy from higher
volumes as well as tariff hikes. Strong
business in fire and health segments
boosted growth for Bajaj (26% yoy) and SBI
Life (26% yoy) while ICICI Lombard was
down 2% due to slowdown in crop; Chola
was moderate at 15% yoy.Corp premium weak: down 2% in April
and 15% in May. Crop insurance premium
was up 20% in FY2019. Most business in
the first two months is a spillover of the Rabi
season and hence may not be an accurate
representation for the rest of the year.
Slowdown in ICICI Lombard (down 70%
yoy) and SBI Life (up 8% yoy) reflects the
conservative stance of the companies in this
segment. Increase in reinsurance premiums
by GIC and losses faced by most players will
likely lead to a slowdown in FY2020E.
[email protected]Motor premium driven by 11% growth In TP
Group, Government business drive health premiums
High Growth in Fire may not be sustainable