The general insurance industry, which had witnessed a significant degrowth in business across various segments, including motor and health during the first quarter of FY21, is likely to turnaround and register positive growth in the fourth quarter of this fiscal.

Massive degrowth

According to Subramanyam Brahmajosyula, Head Underwriting & Reinsurance, SBI General Insurance, the industry had witnessed a massive degrowth in business during the first two to three months of the current fiscal, and most business segments other than fire, had registered a drop in growth.

However, from Q2 there was a gradual uptick in demand and the industry is hopeful of ending the year in a “good shape”.

The general insurance industry has registered a growth of around 2.76 per cent year-to-date up to January 2021 (10-month period from April 2020) compared to the same period last year. The non-life industry has been growing by around 13-15 per cent on a year-on-year basis for the last couple of years.

“While the growth rate is lower than the previous performance of the industry as a whole, considering what we saw in the initial stages, this is a good turnaround.

“We were initially worried that it may take two years or longer to bounce back to the kind of growth rate we were experiencing earlier, but now I am almost confident that we should be close to business as usual by next year in terms of growth rates,” said Brahmajosyula at an InsureInd event organised by the CII here on Friday.

While fire insurance has seen a growth of around 30 per cent, health and liability witnessed a growth of around 15 per cent each.

There has been a lot of interest and enquiries from customers about the various new lines of business, particularly on the liability side, and the industry should look to capitalise on it. Moving forward, the industry should focus on product innovation and enhancement.

“The pandemic has focussed our attention on the need to innovate and some of these learnings have become permanent part of the way we work,” he said.

While it is difficult to predict and price a pandemic like Covid, as an industry, insurers should be better prepared for a risk like this. There is also likely to be a higher demand for business interruption covers and the industry, either on its own or through reinsurance solution providers, should come up with something to address this demand.

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