In contrast to last year’s renewal, April 1 in India reportedly saw a resurgence in property catastrophe capacity, with reinsurers demonstrating an increased appetite to grow their books, according to a new report from Aon.
Despite this excess capacity in property catastrophe, Aon’s report explained that reinsurers remained disciplined.
Meanwhile, being one of the world’s largest agriculture insurance markets, many of India’s state schemes again purchased reinsurance at April 1. However, this year reportedly saw a smaller renewal than 2023, with around 70-75% of the premiums placed last year on multi-year deals.
“As with 2023, strong growth prospects and sustained good performance ensured that agribusiness renewing this year continued to attract the support of reinsurers. Despite a reduction in direct premium rates, reinsurance capacity was more than adequate at the April renewal,” Aon observed.
The insurance and reinsurance broker continued, “With a fast-growing economy, a proactive regulator, and an appetite for technology and innovation, India’s increasingly liberalized insurance sector is on an upward trajectory.
“As a rapidly developing market, India presents new opportunities for reinsurers. Closing the country’s large protection gaps and supporting the growth of new and existing lines will require significant additional capacity, as well as innovation.”
Despite significant exposure to earthquakes, cyclones and floods, Aon noted that non-life insurance premiums as a percentage of GDP in India are relatively low at around 1%, resulting in a “sizable” protection gap.
“Between 2015 and 2023, natural disasters in India caused an estimated $49.02 billion in damage, of which just $3.45 billion was insured,” the firm added.
However, the government and the insurance regulator are said to be looking to increase penetration rates, having launched an “insurance for all” initiative in 2022, which aims to give every person and company access to insurance by 2047.
Aon said it is working with insurers and state governments on potential solutions, including parametric insurance products and catastrophe bonds.
