“India’s long-term economic outlook remains favourable for non-life insurance growth despite the near-term moderation,” said Chris Lim, associate director, analytics, AM Best.
Singapore: International rating agency AM Best has maintained its outlook on India’s non-life insurance segment at stable, citing supportive macroeconomics, as well as insurance demand buttressed by regulatory initiatives and reforms.
India’s non-life segment recorded mid-single-digit premium growth for the fiscal year ending 31 March 2025 (FY2025), according to the Best’s Market Segment Report, “Market Segment Outlook: India Non-Life Insurance.”
Growth moderated relative to the prior year given the pricing pressure in the fire segment and slower business expansion in motor insurance. FY2025 also saw changes in accounting for long-term policies, further dampening reported growth.
Despite these challenges, momentum is expected to improve over the near term as insurance demand strengthens and regulatory financial inclusion initiatives gain traction.
“India’s long-term economic outlook remains favourable for non-life insurance growth despite the near-term moderation,” said Chris Lim, associate director, analytics, AM Best.
“Recent reform to the goods and services tax directly supports insurance demand by reducing the rate on individual life and health insurance policies to 0% from 18%. Improved affordability, particularly for health insurance policies, is expected to bolster individual health insurance demand meaningfully.”
A key provision in the recently passed Sabka Bima Sabki Raksha Bill (Amendment of Insurance Laws), 2025, raises the foreign direct investment limit in insurance companies to 100% from 74%. This is expected to attract additional capital, enhance financial flexibility and bolster the segment’s solvency.
“While increased foreign participation may initially intensify competition, it is also likely to accelerate innovation, efficiency and market maturity over time”, said Victoria Ohorodnyk, director, analytics, AM Best.
The report also notes that investment yields for Indian non-life insurers are expected to remain broadly steady. Consistent interest rates, together with the resilience of domestic equity markets, are expected to support investment returns over the medium term, although elevated equity exposure heightens sensitivity to market volatility.