Strong economic progress and an evolving regulatory regime are expected to support the growth of India’s re/insurance sectors over the coming years, according to an analyst at Moody’s Investors Service.
In addition, robust gross domestic product (GDP) expansion and low insurance penetration should help foster double-digit growth for the non-life sector within four years.
Analysts state that, during the 2018 fiscal year, total gross premiums for the non-life and life insurance sectors experienced 11.5% growth to INR6.1 trillion (USD94 billion), raising the five-year compound annual growth rate (CAGR) to 11%.
“The Insurance Regulatory and Development Authority of India (IRDAI) is proactively introducing regulations that will support insurers’ balance sheets and improve their access to capital, a credit positive,” says Mohammed Londe, a Moody’s Assistant Vice President and Analyst.
Furthermore, liberalisation of the reinsurance sector – such as the admission of foreign reinsurers since 2017 and steps by the IDRAI to ensure it can compete with incumbents – will specifically benefit the non-life sector.
Moody’s says regulatory reforms will also improve the sector’s capital strength. In 2015, IRDAI raised the ceiling on foreign ownership of Indian insurers to 49% from 26%, encouraging global players to buy holdings in local entities.
Finally, Moody’s claims that the government’s launch of its 2018 program aimed at providing health insurance for 100 million families, is credit positive as it will help grow health premiums and provide insurers with cross-selling opportunities.
