SINGAPORE, January 16, 2025 – According to AM Best, India’s non-life insurance sector is looking strong. They believe the market can grow steadily due to more demand for insurance and positive regulatory changes.
In the fiscal year ending March 31, 2024, insurance premiums in this segment rose sharply, driven mainly by health and motor insurance. Meanwhile, India’s economy expanded by 8.2%, boosted by government investments in infrastructure and increased spending by households. While there are signs that the economy might slow down, policies from the government and the Reserve Bank of India are expected to support continued growth.
The Insurance Regulatory and Development Authority of India is working hard to ensure that everyone in the country has access to insurance by 2047. Their plan includes several key initiatives to grow the industry and increase coverage. Some programs include “Bima Sugam,” an electronic marketplace for insurance, “Bima Vistaar,” which offers a range of products covering life, health, and property risks, and “Bima Vaahak,” a distribution channel focused on women.
Chris Lim, an associate director at AM Best, stated, “India’s non-life premium growth will likely be supported by the nation’s continued economic development and efforts to increase insurance penetration.” This indicates a positive trend for both the insurance market and its consumers.
AM Best also noted that recent monetary policies in India are favorable for the investment income of non-life insurers. Interest rates have stayed steady, which helps insurance companies invest in better-performing assets. The Reserve Bank of India has kept the repo rate at 6.5% since February 2023 to manage inflation. This stability should lead to good returns for insurers as they reinvest their capital.
Victoria Ohorodnyk, a director at AM Best, added that stable interest rates combined with positive equity market performance could lead to solid gains in the medium term. However, she cautioned that insurers need to stick to disciplined investment strategies to avoid market risks.
Despite the growth in premiums, the report highlights that India’s non-life insurance sector still faces challenges. Underwriting losses were reported for FY 2024, mainly due to intense competition, poor pricing practices, and claims fraud. Insurers will need to address these issues to maintain profitability.
For a deeper dive into this subject, you can find the full report on the [AM Best website](http://www3.ambest.com/bestweek/purchase.asp?record_code=350435).
About AM Best: AM Best is a global credit rating agency that specializes in the insurance sector. They operate in over 100 countries and provide valuable insights and ratings that help insurance companies and consumers make informed decisions.
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Source linkIndia, Market Segment, regulatory initiatives, India’s economy, Chris Lim, non-life insurance, industry growth, insurance, motor insurance
