The growth rate of India's general insurance industry is set to more than halve this year as a result of the COVID-19 pandemic, analysis by GlobalData suggests.
The data and analytics firm predicts India's general insurance market to grow by just 4% this year, down from 10% in 2019.
Declines in key sectors such as automotive, manufacturing and construction are expected to heavily impact the industry after they accounted for more than 47% of general insurance premiums in 2019.
In total, GlobalData forecasts a compound annual growth rate (CAGR) of 6.2% for the general insurance market from 2019-2023.
“The country-wide lockdown that lasted for over two months added pressure on the economy that was already showing signs of slowing down," said GlobalData insurance analyst Pratyusha Mekala.
“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 economic activity will result in lower premium collections in the general insurance segment.”
How India's general insurance market is forecast to grow is shown below:
GlobalData said that India's motor industry is facing severe slowdown due to supply chain disruptions, stalled production and low demand, with zero sales registered in April 2020 due to the lockdown.
Sales picked up marginally in May after restrictions were eased by the government, but are well below pre-COVID-19 levels.
Similar stagnation is observed in construction and real estate where demand reduced by 30% in the first quarter of 2020, which is expected to result in fewer new business premiums in the property insurance line of business.
“Lockdown restrictions are being eased by the government, however, the risk of outbreak persists as large number of cases are being registered daily across the country,” Mekala continued.
“While the easing of lockdown restrictions will help revive the stalled business operations, recovery in general insurance segment is expected to be a protracted one, taking as long as the second half of financial year 2021.”
Author: Chris Seekings
Image credit: iStock
Graphic credit: GlobalData