The latest figures come from the Insurance—India: Continued regulatory evolution is credit positive for India’s insurance sector report by credit rating agency Moody’s Investors Service.
The findings show that the GDP expansion, together with a low insurance penetration, should support the growth of the insurance business in India in the next three to four years.
According to Moody’s, in the fiscal year ending March 2018, the total gross premium for both life and non-life insurance businesses increased by 11.5% to INR6.1tn ($94bn, £72bn, €82bn). This means that the five-year compound annual growth rate would now go 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, assistant vice president and analyst at Moody’s.
Additionally, the regulatory reforms in place have improved the insurance sector and the government is currently considering more. In 2015, the IRDAI increased the percentage of foreign ownership of Indian insurers to 49% from 26%, attracting more global players into its insurance sector.
Similarly, the introduction of health insurance for 100 million Indian families in 2018 will help health premiums grow and provide cross-selling opportunities to insurers.
However, most Indian states have decided to run the scheme as a trust model, limiting the full growth for potential insurers.