India on track for decade of 14% insurance growth to take world’s #6 slot
The Indian insurance market will likely grow at an average annual rate of 14% over the coming decade to become the world's sixth largest market, analysts at Swiss Re institute have claimed.
“India is one of the fastest growing insurance markets in the world, and we forecast that it will be the sixth largest by 2032,” analysts wrote.
P&C insurance will lead, with the sum of non-life elements exceeding the 9% expected for life insurance, although near-term non-life insurance premium growth will suffer on account of inflation and spill-over tensions from the Russia invasion of Ukraine.
Health is the largest line of business in the non-life sector, in part as the pandemic helped fuel 22.5% growth in 2021. But India still suffers one of the highest insurance gaps in health in the world at 35% versus the 7.5% global average. Limited public sector offers means out-of-pocket expenditure accounts for more than half of total healthcare spend in India.
Motor and agriculture lines follow health. Motor premiums are recovering from the pandemic and will likely end 2022 with a 2.9% rate of growth, on their way to just under 8% by 2024 and 2025, analysts say.
Agriculture insurance may continue to contract in 2022, albeit at a reduced pace versus prior years, al following subsidy cuts. "We expect premium growth to pick-up gradually from 2023 as the impact of regulatory changes is absorbed," analysts wrote. But forecast growth rates will not exceed low single digit levels through 2025, forecasts show.
Inflation will undercut profits. Swiss Re expects non-life insurers "will continue to face near-term headwinds in the profitability of their core underwriting portfolios" due to geopolitical tensions, high inflation and intense competition.
The nation suffers excessive nat cat risks, Swiss Re reminds. Earthquakes, tropical cyclone, floods and wildfires all make the list, with some regions vulnerable to more than one
peril.
The natural catastrophe protection gap in India was 95%, or $2.61 billion, in 2021, "one of the highest in the world and significantly above the emerging markets’ average."
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