Indian market will grow 7% CAGR to 2028 in slog against insurance gap
The Indian insurance market should enjoy annual premium growth at some 7.1% in real terms over inflation over the coming five years through 2028, in part on a continuing fight to trim the country’s enduring insurance gap, analysts from Swiss Re have forecast.
India’s CAGR pace of 7.1% should handily beat a 2.4% global average and the higher 5.1% average growth expected in emerging markets and 1.7% in core advanced markets, analysts wrote in their latest research.
The life segment, which accounts for about three quarters of total insurance premiums in India, should grow at an annual average of 6.7% for 2024-2028, while non-life premiums, including health, are expected to expand by an average of 8.3%, Swiss Re forecasts.
Give the fast-growing Indian economy a decade, and total inflation-adjusted premiums should more than double while insurance penetration increases from 3.8% today to 4.5% in 2034.
Growth follows what Swiss Re lauds as admirable “economic growth, an expanding middle class, innovation and regulatory support”. India’s insurance regulatory office IRDAI is pushing to ensure all citizens have “appropriate” levels of life, health and property insurance cover by 2047.
Natural catastrophe exposures remain a heady threat and a source of underinsurance. Earthquakes, floods, tropical cyclones, drought and wildfires wrought inflation-adjusted average annual economic losses of $8 billion over the past decade. But Swiss Re finds 93% of exposures uninsured, often on account of climate change effects, lack of awareness and low perception of risk, poor risk assessment for public sector infrastructure projects and underwriting challenges.
Mahesh Puttaiah, Swiss Re Institute’s head group economic & sigma research in Bangalore, commented: “India has made strong progress in developing the insurance sector and there remains significant potential for growth given the country's low insurance penetration. India has also made good progress on risk mitigation measures for tropical cyclones, such setting up early warning systems. But there is a long way to go on this front for other hazards (e.g., floods).”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
