The Indian insurance sector is expected to be the fastest growing among the G20 with total insurance premiums forecast to grow by 7.1% in real terms over 2024-2028, according to reinsurance giant Swiss Re.
7.1% growth over the next five years is well above the market averages for global of 2.4%, emerging of 5.1% and advancing of 1.7%.
Swiss Re Institute has also forecasted the total premiums will more than double (inflation-adjusted) over the next decade, and insurance penetration will increase from 3.8% currently to 4.5% in 2034.
India’s economy has remained resilient and is estimated to expand by 6.7% in 2023, supported by private consumption and fixed investment, says the reinsurer. The driving factors for this growth are economic growth, an expanding middle class, innovation, and regulatory support.
According to the strategic plan of the Insurance Regulatory and Development Authority of India (IRDAI), all citizens should have “appropriate life, health and property insurance cover” by 2047.
Split by segment, Swiss Re notes that the life market accounts for about three-quarters of total insurance premiums in India and is forecast to grow at an annual average of 6.7% for 2024-2028.
Meanwhile, non-life premiums (including health) are expected to expand by an average of 8.3% over the same period.
Although India is exposed to many natural catastrophes, with an average annual economic loss of $8 billion (inflation-adjusted) over 2013-2022, Swiss Re analysis indicates that insurance protection against natural catastrophe risks is low, with 93% of exposures in India being uninsured.
The result is a significant natural catastrophe protection gap in India. Challenges to narrowing the gap include climate change effects; lack of awareness and low perception of risk; poor risk assessment for public sector infrastructure projects; and underwriting challenges.
Mahesh H Puttaiah, Head Group Economic & Sigma Research Bangalore, Swiss Re Institute, says: “India has made strong progress in developing the insurance sector and there remains significant potential for growth given the country’s low insurance penetration.
“India has also made good progress on risk mitigation measures for tropical cyclones, such setting up early warning systems. But there is a long way to go on this front for other hazards (eg, floods). The insurance industry has solutions to help individuals and companies to manage financial losses that result from natural catastrophes, while at the state level, re/insurance solutions can support governments in relief and rehabilitation work, in reinstating crucial services and in the rebuilding of public infrastructure.”
