Chennai, With mergers and acquisitions (M&A) already dotting the private players in the Indian general insurance sector this fiscal and Covid-19 pandemic hitting, it is going to be the survival of the fittest as more M&A deals are expected to happen next fiscal, said senior industry officials.

"World over, the initial reaction of governments and companies to the pandemic has been to cushion the effect of the fall to the extent possible. The world is still grappling with the daily realities and the impact on people, business and systems and processes," Roopam Asthana, CEO and the Whole Time Director, Liberty General Insurance Ltd told IANS.

"But it just doesn't stop at cushioning the fall -- it is critical to accept the pain, measure the impact of the injury and be prepared for recovery. Simply put, the next year is going to be about the survival of the fittest," Asthana added.

Expecting few more promoter exits in the coming months Asthana said it is time for the foreign direct investment in the insurance sector to be increased to 74 per cent so as to attract long term foreign capital that is very essential for expanding the reach of insurance in every corner of the country.

Terming mergers and acquisitions as a legitimate inorganic growth strategy, Sharad Mathur, Managing Director & CEO, Universal Sompo General Insurance Company Ltd told IANS: "Stable and established players would likely be in the look-out of opportunities."

He said, world over that post opening up of the insurance sector, there is mush-rooming proliferation of players. The next phase is characterised by merger and acquisition, by consolidation.

"The process usually starts in 6-8 years after opening up. It has not happened in India in the sense that it is already two decades of liberalisation and M&As in a big way have not taken place. It only means that the trends have been slow in cooking and are building up. Hence, the pace of M&As should pick up," Mathur remarked.

In the recent times, the Indian general insurance sector saw Paytm acquiring Raheja QBE, HDFC Ergo acquiring Apollo Munich, Sachin Bansal buying DHFL General Insurance and the merger of ICICI Lombard and Bharti Axa General.

"Acquisitions are becoming a strategic business route. Increased fundraising activity in the sector is an indicator of growth and scale of business," Shanai Ghosh, Executive Director & CEO, Edelweiss General Insurance told IANS.

Be that as it may, the officials expect FY22 to be growth oriented for the sector with pre-corona momentum in the economy resuming.

"Post announcement of official India Q1 FY 21 GDP (gross domestic product) growth rate, the overall FY 21 forecast downgraded by all agencies. But economy predicted to grow by 11 per cent in FY 22 and six per cent in FY 23 (Fitch). Despite the setback in FY 21 (around nine per cent to 11 per cent negative GDP growth is being projected at the moment) and irrespective of the nature of the recovery curve (V or U), the pre-corona momentum in the economy would resume. In fact, the low base of FY 21 would be the reason for high growth in the subsequent FYs," Mathur said.

On his part Asthana said, the Covid-19 impact for a general insurer has been mixed - health insurance has picked up significantly, whereas motor insurance has been hurt considerably.

"The regulator is trying hard to improve the scope and ambit of coverage of health insurance and is continuously talking to and taking feedback from insurers like us. But all this has also had an impact on risk assessment - thus impacting premiums and the customer's pocket. With that said, I do envisage a spurt in demand for general insurance post June/July 2021," Asthana added.

According to him, there is early revival in growth emanating from small town India where motor business has started to recover.

"The growth has been driven by both commercial insurance and health insurance segments. Liberty has achieved 44 per cent growth in retail health insurance and 24 per cent growth in fire insurance over last year (April-October)," Asthana said.

According to Ghosh, the economy is beginning to look upwards and will steadily start getting back to normalcy in the next fiscal.

"We expect Insurance to grow in relevance and importance post pandemic, both for Individuals and businesses. The industry KPIs (key performance indicator) should be back at pre-Covid levels by mid FY22," Ghosh said.