India’s insurance market projected to be the G20’s fastest-growing market over the next five years, with total premium volumes (life and non-life) up 7.3% in real terms on average each year. Growth underpinned by macroeconomic tailwinds, digitalisation progress and the conducive regulatory environment
In 2023, natural catastrophes in India resulted in economic losses of USD 12 billion, well above the previous 10-year average of USD 8 billion
Mumbai: India expected to surpass Germany and Japan to become the world’s third largest economy by the end of this decade, driven by domestic consumption, private investment and economic reforms, said Swiss Re, the second largest global reinsurer..
The economy will also derive support from steady global growth, forecast at 2.8% in 2025 and 2.7% in 2026.
“We forecast average real GDP growth of 6.2% annually over the next 10 years to 2034 (10% in nominal terms). For this year and next, we estimate average annual real GDP growth of 6.9%, up from 6.5% in 2024, and higher than the annual average of 5.8% over the previous 10 years. Domestic consumption, private investment and economic reforms will underpin the strong growth,” outlined Swiss Re in its latest report “India’s economy and insurance market: growing rapidly, but mind the risk hotspots.”
Some of the points the reinsurer has highlighted about the Indian insurance sector are-
• India’s insurance market projected to be the G20’s fastest-growing market over the next five years,with total premium volumes (life and non-life) up 7.3% in real terms on average each year. Growth underpinned by macroeconomic tailwinds, digitalisation progress and the conducive regulatory environment.
• Life insurance the mainstay of India’s insurance market, accounting for 74% of total premium volumes. Life premiums are estimated to grow by 4.8% in 2024 in real terms and by 5% in 2025 (2025-29: 6.9%), following a meagre 0.7% growth in 2023, when the savings segment was adversely impacted by regulatory and taxation changes.
• Non-life insurance business forecast to expand to 7.3% (up from 5.7% in 2024) on the back of rising risk awareness, robust economic growth and regulatory initiatives in support of digitalisation.
Apart from health and motor – the largest lines of non-life business –penetration of agricultural insurance has improved with changes to the Pradhan Mantri Fasal Bima Yojana (PMFBY) crop insurance scheme in 2023.
• India’s fast expanding economy creating risk hotspots, especially in some regions of Gujarat, Maharashtra, Tamil Nadu and Delhi, with high concentrations of industrial clusters, logistics infrastructure, renewable energy and other assets, which are vulnerable to flood and earthquake, among other risks. In 2023, natural catastrophes in India resulted in economic losses of USD 12 billion, well above the previous 10-year average of USD 8 billion.
Mahesh H Puttaiah, Head Insurance Market Analysis, Swiss Re, says,” The rapid pace of India’s economic growth has moved faster than actions taken to reduce the vulnerabilities posed by natural catastrophes. Identification and accurate assessment of risk accumulation in hotspots is crucial to strengthening resilience and the re/insurance industry plays an important role.”
Alongside economic development, India has made progress in its transition to net-zero by 2070, with increased focus on renewables, low-carbon transport and industrial decarbonisation, he added.
Facilitating the transition requires investment into adaptation and mitigation measures, for example, sustainable infrastructure and related technologies. Re/insurers can improve the viability of large transition projects by providing tailored risk solutions, which leverage their extensive experience and risk engineering and underwriting data, suggested Puttaiah.