New Delhi, Nov 28: Moody’s Investors Service today projected a double digit growth for non-life insurance companies over the next 3-4 years as India’s economic expansion would support premium growth. Moody’s recently upgraded India’s sovereign rating to Baa2 and said it expects GDP to expand by 6.7 per cent in 2017-18 fiscal, making it one of the world’s fastest-growing economies. “
Given India’s projected economic expansion, we expect the non-life insurance sector to maintain its double digit growth over the next 3-4 years,” it said. Annual insurance premium penetration remains comparatively low in India at just 3.5 per cent of GDP, and is likely to increase in line with household spending. In 2016-17 fiscal, the top 10 non-life insurers reported 30 per cent growth in gross premiums to Rs 1 lakh crore while top 5 life insurers reported a 14 per cent increase in gross premiums to Rs 3 lakh crore.
Moody’s said regulatory reforms would improve access to capital. In 2015, the Insurance Regulatory and Development Authority of India (IRDAI) raised the maximum stake that foreign investors can hold in Indian insurers to 49 per cent from 26 per cent. The regulator also made it easier for Indian insurers to launch initial public offerings (IPOs) and for state-owned insurers to privatise. This has led to the IPOs of four private and two state- owned insurers over the past 14 months. The IPOs of three more state-owned insurers (United India Insurance, National Insurance and The Oriental Insurance) are scheduled for 2018.
“The changes will help the government privatise its insurers, while allowing insurers to bolster their capital, improve their financial flexibility, and gain access to foreign expertise,” Moody’s said.