New Delhi: Moody's Investors Service on Tuesday said India's insurance and reinsurance sectors will grow strongly driven by strong economic growth and evolving regulatory regime.
It said robust GDP expansion, coupled with current low insurance penetration, should support double digit growth for the non-life sector over the next 3-4 years.
During fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5 percent to Rs 6.1 lakh crore ($94 billion), bringing the 5-year compound annual growth rate (CAGR) to 11 percent.
"India's strong economy and evolving regulatory regime continue to support growth for its insurance and reinsurance sectors," Moody's said in a report titled Insurance — India: Continued regulatory evolution is credit positive for India's insurance sector.
Moody's said it expects India's real GDP to expand by 7.4 percent and 7.3 percent in fiscal 2019 and 2020, making the Indian economy one of the world's fastest-growing.
"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," Moody's assistant VP and analyst Mohammed Londe said.
Liberalisation of the reinsurance sector — with the admission of foreign reinsurers since 2017 and IRDAI's steps to ensure that they can compete with incumbents — will specifically benefit the non-life sector. Regulatory reforms will also improve the sector's capital strength, Moody's said.
"In 2015, IRDAI raised the ceiling on foreign ownership of Indian insurers to 49 percent from 26 percent, encouraging global players to buy holdings in local entities.
Besides, the government's launch of a new program in 2018 to provide health insurance for 100 million families is credit positive as it will help grow health premiums and provide insurers with cross-selling opportunities, it noted.
To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.
To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.
Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.
Updated Date: Jan 22, 2019 16:20:23 IST