Analysts at the Swiss Re Institute have suggested that the Insurance Regulatory and Development Authority of India (IRDAI) is pushing for reforms to develop the country into a reinsurance hub.
Regulatory developments and digitalisation should foster support for re/insurance market sector growth, says Swiss Re. The firm’s analysts note a series of regulations that are being introduced to improve insurance penetration, increase capital inflow, improve valuation, and facilitate the entry of small, specialised and niche players.
It adds that the government raised the limit on foreign direct investment in the insurance sector to 74% from 49%, with the IRDAI planning to introduce risk-based capital requirements.
The regulator has also suggested amendments to the existing regulatory sandbox that could support further innovation in the sector.
Meanwhile, Swiss Re states that following the various factors that are now hampering the global economy will likely spillover into India in the near term, and, after a strong recovery to 8.7% growth in 2021 from the pandemic-induced slump, it estimates that real gross domestic product (GDP) growth will slow to 7.0% in 2022 and to 5.4% in 2023.
The analysts observe that inflation will remain a near-term concern, the main drivers being high energy and commodity prices, rupee weakness, and interest rate hikes in advanced economies.
Swiss Re writes, “All told, we remain positive on India’s medium- to long-term economic outlook: we forecast average annual real GDP growth of 6.7% in the 10 years to 2032.
“We are also positive on the insurance market. India is one of the fastest-growing insurance markets in the world, and we forecast that it will be the sixth largest by 2032. We estimate that total insurance premiums will grow on average by 14% annually in nominal local currency terms (9% per annum in real terms) over the next decade.”
