Optima Insurance Brokers Pvt. Ltd.

Public Sector General Insurance Companies (PSGICs) in India earned a combined profit of Rs 1,066 crore in Q3FY25, marking a significant financial turnaround from historically reported losses. The PSGICs had combined losses of over Rs 10,000 crore in 2022–23.

This remarkable turnaround in Q3FY25 wherein all individual PSGICs became profitable was a result of reforms leading to improved risk-management practices, loss-control initiatives, technology adoption, new product development, improved customer services, and portfolio diversification.

United India Insurance Company Ltd (UIICL) reported a profit in Q3 of 2024-25 after seven years while Oriental Insurance Company Ltd (OICL) and National Insurance Company Ltd (NICL) began reporting quarterly profits in Q4 of 2023-24 and Q2 of 2024-25, respectively.

Notably, New India Assurance Company Ltd (NIACL) has continuously made money and held its market leader position. In Q3FY25, NIA’s net profit dropped by almost 51% to Rs 353 crore.

This turnaround came on the back of capital infusion of Rs 17,450 crore in these PSGICs between 2019–20 and 2021–22 in order to enable these businesses to implement structural changes, improve operational effectiveness, and return to profits again.

PSGICs are focusing on providing top-notch insurance products and services, guaranteeing long-term viability and improving customer satisfaction, all the while attaining growth to achieve “Insurance for All” by 2047.

Indian insurance market is on rise with the total insurance premiums growing by 7.7% in FY24 and reaching Rs 11.2 lakh crore, despite a minor drop in insurance penetration from 4% in FY23 to 3.7% in FY24. While non-life insurance penetration stayed steady at 1%, life insurance penetration decreased slightly from 3% in FY23 to 2.8% in FY24.

It is noteworthy that Indian insurance industry received the highest FDI at 62% of total equity FDI inflows to the services sector. A growth opportunity exists in Tier 2 and Tier 3 cities with an insurance penetration rate of 3.7%, lower than the global average of 7%.

Innovative distribution models can help enhance Insurance density in India, having increased slightly from $92 in FY23 to $95 in FY24, which is still lower than global standards. While Life insurance density stayed steady at $70, non-life insurance density rose from $22 to $25.

Non-life insurers’ gross direct premiums grew by 7.7% year over year, from Rs 2.6 lakh crore in FY23 to Rs 2.9 lakh crore in FY24, led primarily by Health and Motor segments.

With premium income of Rs 8.3 lakh crore in FY24 compared to Rs 7.8 lakh crore in FY23, the life insurance sector grew by 6.1% YoY. New businesses contributed the remaining 45.6% of the total premiums received by the life insurers, with renewal premiums making up 54.4%.

In FY24, the life insurance sector disbursed benefits totaling Rs 5.8 lakh crore, of which Rs 42,284 crore was attributable to death claims. In same period, non-life insurers’ net incurred claims totaled Rs 1.72 lakh crore.