It said over the past five years, the gross written premium has grown at a compounded annual rate (CAGR) of 18.1 per cent to Rs 65,000 crore in FY13. According to Icra's study on the general insurance sector in India, the private sector players have maintained a higher growth rate compared to their public-sector peers and have seen a gradual increase in their market share to 47 per cent in the first half of FY14. This was 40 per cent in FY08.
Icra said motor is the largest segment (46 per cent market share), but added growth would moderate in line with the decline in automobile industry's growth. Health segment (26 per cent share) is expected to maintain a steady growth.
Fire and engineering segments, with 14 per cent share each, are likely to be impacted directly by the general slowdown in the economy.
Investment income - including realised gains from the sale of investments - supports the overall profitability as entities continue to report underwriting losses, particularly for the public sector players who have sizeable unrealised gains on their investment portfolio (Rs 33,100 crore as on September 2013).
Srinivasan added the actual capital requirements will depend on the business mix, growth rates and claims experience. In order to maintain solvency at 1.75 times, while growing at a CAGR of 15-20 per cent and maintaining similar claims records, the general insurance sector will require Rs 7,500-17,500 crore of capital over the next five years. Out of which, the requirement for private sector will be around Rs 4,500-8,000 crore.
Going forward, ICRA expects the industry to move closer to risk-based pricing model with the help of technology, outreach, increased focus on franchise building, cost competitiveness, and product differentiation.