Moodys Investors Service said that countrys slowing economy will weigh on insurance premium growth over the next 2-3 years, while supportive measures put in place by the Insurance Regulatory and Development Authority of India (IRDAI) will help counterbalance the deteriorating economic environment.
Indias GDP growth weakened to its slowest rate in five years in the fiscal year ended March 2019, and the resultant financial pressure on rural households amid weaker job creation is in turn also weighing on premium growth, says Benjamin Serra, a Moodys Senior vice-president.
GDP growth slowed to 6.8% in fiscal 2018 and could slow further to 4.9% in fiscal 2019 before recovering to 6.3% in fiscal 2020, the rating agency said.
Nevertheless, the countrys low insurance penetration rate suggests ample room for further growth, while supportive government and regulatory initiatives are also helping mitigate the currently challenging environment for Indian insurance and reinsurance companies, the report said.
Health premiums in particular are likely to increase as a result of the Ayushman Bharat initiative the rating agency said.
In addition, the insurance regulator has put in place a series of measures, including the removal of the limit on foreign ownership stakes in Indian insurance intermediaries, which will strengthen distribution capabilities.