Insurers report improved business growth in Q1FY25

Mumbai: Life insurance companies are likely to report a strong quarter on the back of the favorable base of Q1FY24 (post the bumper sales of non-par savings products in Q4FY23 driven by taxation changes) and buoyant equity markets.

However, increased Unit Linked policies in the product mix and some pressure on group term pricing would keep the profitability in check said analysts. On the other hand, non-life insurance sector is expected to report strong premium growth to be driven by motor, health, and commercial lines of business. On profitability, general insurers could see marginal improvement in Combined Ratio driven by improvement in claims ratio.

Overall, beyond Q1FY25, it will be another year of reset for life insurers, when they will reset non-linked product offerings by adjusting maturity benefits to the policyholders and commissions to the distributors, to reflect the realities of new Surrender Regulations. On the general insurance front, noise on the composite licensing regime will continue to be bothersome, until it becomes a reality,” said Avinash Singh and Mahesk Shah of Emkay Global.

“For non-life insurance companies, claims ratio across players is likely to improve on the back of multiple claims control and fraud prevention measures resulting in an improvement in Combined Ratio.

Further, driven by improvement in underwriting performance and increased investment income, profitability of general insurance companies is expected to see decent-to-robust growth,” added the Emkay Analysts.

Life insurers recorded a 22.9 per cent increase in new business premium collection in the first quarter of the current fiscal. The new business premium collection rose by 14.80 per cent in June 2024, according to data released by the Life Insurance Council on Monday. New business premium income rose to Rs 42,433 crore in June 2024 from Rs 36,961 crore in June 2023.