India’s general insurance business may grow 4% in the year 2020

General insurance industry in India is projected to grow 4% in 2020, compared with a 10% growth in the previous year, according to GlobalData, a London-based data and analytics company. GlobalData revised India’s insurance forecast in the aftermath of the global covid-19 outbreak.
As per the latest data, India’s general insurance market is estimated to grow at a compound annual growth rate (CAGR) of 6.2% during 2019-2023. At present, there are 25 general insurers in India, excluding seven standalone health insurance firms and two agricultural insurance companies. For the fiscal year 2019-20, the 25 general insurers underwrote a gross direct premium of Rs. 1.64 trillion as compared to Rs. 1.5 trillion in fiscal year 2019, according to a data by the Insurance Regulatory and Development Authority of India or Irdai.
“The country-wide lockdown that lasted for over two months added pressure on the economy that was already showing signs of slowing down. Indian economy is now expected to grow at 1.63% in the financial year 2020-21, as compared to the pre-COVID estimate of 6.4%. The slowdown in the economic activity will result in lower premium collections in the general insurance segment,” Pratyusha Mekala, insurance analyst at GlobalData, said. Decline in key sectors such as auto, manufacturing and construction is expected to heavily impact insurance industry. These industries accounted for more than 47% of general insurance premiums in 2019, said the report.
Auto industry is facing severe slowdown due to supply chain disruptions, stalled production and low demand. “In April 2020, automobile manufacturers registered zero sales due to the lockdown. Sales have picked up marginally in May after the lockdown restrictions were eased by the government; but are well below the pre-COVID levels,” said the report.