DUBAI —

Moody’s Investors Service says in a new report that India’s strong economy and evolving regulatory regime continue to support growth for its insurance and reinsurance sectors. The report, “Insurance -- India: Continued regulatory evolution is credit positive for India’s insurance sector», said robust GDP expansion, coupled with current low insurance penetration, should support double digit growth for the non-life sector over the next 3-4 years. During fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5% to INR6.1 trillion (USD94.0 billion), bringing the 5-year compound annual growth rate (CAGR) 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,” said Mohammed Londe, a Moody’s Assistant Vice President and Analyst.

Liberalization of the reinsurance sector -- with the admission of foreign reinsurers since 2017 and IRDAI’s steps to ensure that they can compete with incumbents -- will specifically benefit the non-life sector.

Regulatory reforms will also improve the sector’s capital strength, says Moody’s. In 2015, IRDAI raised the ceiling on foreign ownership of Indian insurers to 49% from 26%, encouraging global players to buy holdings in local entities.

Finally, the government’s launch of a new program in 2018 to provide health insurance for 100 million families is credit positive as it will help grow health premiums and provide insurers with cross-selling opportunities. Most Indian states have chosen to run the scheme as a trust model, which will limit the full growth potential for insurers. — SG