Health Segment leads growth in Insurance sector in FY2024: ICRA

The industry GDPI rises by 15.5 per cent, driven by increased health insurance awareness

The health segment, which witnessed a strong growth, accounting for approximately 50 per cent of incremental GDPI of around Rs. 375 billion in FY2024, is likely to remain the key driver with the rising awareness of health insurance and increased ticket sizes, according to ICRA report.

In FY2024, the  (GDPI) expanded by 15.5 per cent, reaching Rs. 2.79 trillion, supported significantly by the health segment.  

The sector’s financial performance remained strong despite the impact of natural catastrophic events, with private insurers showing marked improvements in their combined ratio and return on equity (RoE). ICRA projects the industry’s GDPI to grow to Rs. 3.7 trillion by FY2026, a robust 32 per cent rise from Rs. 2.8 trillion in FY2024.

The report details that private insurers are expected to see continued strong growth, while public sector undertaking (PSU) insurers may experience moderate growth due to weaker capital positions. The profitability for private insurers is likely to improve, supported by better underwriting performance and investment income. Private insurers’ RoE is anticipated to reach 13.3 per cent in FY2025 and 14.0 per cent in FY2026.

Neha Parikh, Vice President and Sector Head – Financial Sector Ratings, ICRA, says, “With higher growth, the market share of private insurers in terms of GDPI is likely to rise to 69 per cent for FY2025 and 71 per cent for FY2026 from 68 per cent for FY2024. The health segment, which witnessed the strongest growth (accounting for 50 per cent  of incremental GDPI of ~Rs. 375 billion in FY2024), is likely to remain the key driver with the rising awareness of health insurance as well as increased ticket sizes.”

Despite these positive trends, PSU insurers face challenges. Their combined ratio, although improving, is expected to remain weak at 121 per cent in FY2025, down from an estimated 122 per cent in FY2024. Additionally, three PSU insurers, excluding New India, require substantial capital infusions estimated at Rs. 94-102 billion to meet solvency requirements by March 2025.

Apart from this, the growth in the motor segment was healthy, supported by the increase in the new vehicle sales (two-wheelers, or 2W, rose by 13.3 per cent YoY and passenger vehicles, or PVs, by 8.4 per cent YoY in FY2024).