AM Best has reaffirmed a stable outlook for India’s non-life insurance sector, pointing to favourable macroeconomic conditions and strong demand, supported by regulatory initiatives and reforms.
While the segment’s growth slowed in 2025 due to fire-segment pricing pressure, weaker motor expansion, and accounting changes for long-term policies, the rating agency said momentum should improve as demand strengthens and financial inclusion reforms gain traction.
“A key provision in the recently passed Sabka Bima Sabki Raksha Bill (Amendment of Insurance Laws), 2025, raises the foreign direct investment limit in insurance companies to 100% from 74%. This is expected to attract additional capital, enhance financial flexibility and bolster the segment’s solvency,” AM Best explained.
AM Best’s findings echo comments from Prateek Singhal, Executive President and Head of Reinsurance at Howden India, who said in an interview late last year that India’s re/insurance sector is set for strong growth in 2026, driven by government initiatives, new insurance licences, and the rise of GIFT City as a financial hub.
In 2025 alone, several global and domestic reinsurers announced plans to set up in GIFT City, underscoring confidence in India’s regulatory reforms and growth prospects.
Backed by supportive regulation, rising infrastructure investment, and GIFT City’s strategic advantages, it is no surprise that India is increasingly positioned to become a major hub in the global re/insurance market.
Chris Lim, associate director, analytics, AM Best, commented, “India’s long-term economic outlook remains favourable for non-life insurance growth despite the near-term moderation.
“Recent reform to the goods and services tax directly supports insurance demand by reducing the rate on individual life and health insurance policies to 0% from 18%.
“Improved affordability, particularly for health insurance policies, is expected to bolster individual health insurance demand meaningfully.”
Victoria Ohorodnyk, director, analytics, AM Best, said, “While increased foreign participation may initially intensify competition, it is also likely to accelerate innovation, efficiency and market maturity over time.”
