For the first time in India’s insurance sector, the health business has beaten the motor vertical to become the biggest non-life industry segment, boosted by a rise in standard Coronavirus (COVID-19) plans.
On the other hand, a slump in vehicle sales has affected motor insurance.
Till now, the motor insurance segment, driven primarily by the mandatory motor third-party insurance, has always been the largest business segment in the general insurance sector. However, industry sources said that this year, COVID-19 played spoilsport.
“When it comes to third-party cover, it includes insurance for new vehicles as well as renewals. The reality is that customers are not renewing their vehicle insurance since remote working is the new normal. This has severely affected motor premiums,” said the head of sales at a bank-led general insurer.
Insurance Regulatory and Development Authority of India (IRDAI) data showed that while motor insurance premiums saw a 15.7 percent decline, health insurance premiums saw a 13 percent YoY growth in the April 1-August 31 period.
For the general insurance industry, premium collections remained muted for the period with just a 3.6 percent YoY rise to Rs 73,968.26 crore. The health insurance business contributed Rs 22,903.44 crore.
Why is health insurance gaining?
The Coronavirus outbreak and the subsequent lockdowns since March 25 have affected the movement of people. This hit vehicle sales, and subsequently, motor insurance.
On the other hand, COVID-19 cases were constantly on the rise. Several thousand individuals required hospitalisation for treatment.
Insurers said that those without a health policy rushed to buy products since the regulator clarified that every policy covering hospitalisation would also pay for COVID-19 treatment at designated centres.
Also Read: Remote working: Costs rise for insurers as they scramble to ensure