Sector
Sector Update | Financials
Update | 6 March 2025
Indian General Insurance
Fire GWP growth trend
Fire GWP (INRb)
YoY growth
36.1
26.8
P&C becoming pricey!
7.0 11.1 7.2
(5.8)
159 201 215 239 257 212
Top players in the fire insurance
industry
Market
Share (%)
NIA
ICICI Lombard
BAGIC
Tata AIG
HDFC ERGO
United India
Oriental
SBI General
Reliance General
National Insurance
Go Digit
FY23
17.7
12.8
9.0
7.9
7.1
7.9
6.7
6.8
4.2
4.9
1.7
FY24
17.1
13.1
9.3
8.1
7.0
8.1
6.1
7.1
4.3
4.6
1.9
YTD
FY25
15.7
13.4
10.6
8.0
7.5
7.0
6.2
6.1
5.0
4.6
2.1
Fire insurance GWP clocked a 17% CAGR over FY20-24, driven by rising infrastructure
development, growing awareness, and government initiatives. However, in YTDFY25
(till Jan’25), GWP declined 6% YoY, largely due to aggressive discounting by players to
address competitive pressure.
The rising NATCAT claims over the past few years, driven by an increase in catastrophic
events, have largely impacted the commercial lines segment, as evidenced by the
increase in the fire segment loss ratio to 78.3% in FY24 from 58% in FY23. However, in
9MFY25, prudent business selection resulted in only 50-60bp NATCAT impact for BAGIC
and ICICIGI (90-100bp in 9MFY24).
Aggressive discounting amid the high incidence of catastrophic events has led to
unsustainable loss ratios in the commercial segments, creating solvency pressures for
reinsurers. Hence, players have raised their insurance rates, as seen in Jan’25 renewals.
This is expected to drive growth in fire insurance GWP and potentially improve
profitability.
Commercial insurance accounted for ~10% of general insurance premiums. The price
hike is expected to boost industry growth, complemented by increased demand fueled
by: a) a pickup in infrastructure activity and b) favorable lending terms for SMEs. Key
players are enhancing their tech capabilities to improve risk analysis and underwriting
experience, which will help them capture greater market share.
ICICIGI is the largest private insurer in the fire segment, holding a 13.4% market share
in YTDFY25. We remain positive on ICICIGI’s ability to capitalize on growth
opportunities in the fire segment, especially with pricing discipline returning to the
market. We reiterate our BUY rating with a one-year TP of INR2,100 (premised on 32x
FY27E EPS).
Increasing catastrophic events impacting the entire insurance ecosystem
Over the past few years, India and countries across the globe have experienced an
increase in the frequency, intensity, and geographical spread of catastrophic
events. This trend has had a significant impact on the entire ecosystem, from
insurers to reinsurers to customers.
General insurers, especially those dealing with commercial insurance, witnessed a
significant rise in claims following catastrophic events, affecting their profitability. In
FY24, the claims ratio of the fire industry jumped to 78.3% from 58% in FY23.
The large-scale nature of losses in commercial insurance necessitates reliance on
reinsurers to mitigate exposure. Increased occurrences of catastrophic events have
impacted the profitability and solvency of reinsurers. GIC Re, the only Indian
reinsurer (51% market share of gross reinsurance premiums), witnessed a rise in its
claims ratio to 89% in FY24 (vs 80% in FY23).
The hardening of reinsurance costs to maintain solvency will lead to price hikes for
commercial insurance, ultimately affecting policyholders.
Globally, natural catastrophe insured losses remain elevated at USD145b,
surpassing USD100b for the fifth consecutive year (S&P Global Reinsurance Sector
View 2025). The rising frequency and severity of claims have led to a consistent
hardening of rates in the global reinsurance market over the years.
1
Reinsurance rates hardening globally; India to see hardening in 2025
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Research Analyst -Prayesh Jain
(Prayesh.Jain@MotilalOswal.com) |
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com)
Research
2025
-Kartikeya Mohata
(Kartikeya.Mohata@MotilalOswal.com) |
Muskan Chopra
(Muskan.Chopra@MotilalOswal.com)
6 March
Analyst