Indian non-life insurance market stalling, says Best

According to a new Best briefing, this could result in a reduction in insurance companies’ risk-adjusted capitalisation positions as insurance risk growth (indicated by premiums) outpaces capital growth.

Premium growth in India’s non-life insurance market has been led by the unprofitable health insurance business, which has grown into the single largest business line, ahead of motor own damage. “This has added to insurance risk growth in the market but has not contributed to capital growth,” states Best. “It will be interesting to see how the new government-supported crop insurance scheme will impact this dynamic.” The scheme was a major source of growth for the non-life industry in 2016.

Best continues: “Given how the market is segmented into government-owned and private sector-owned insurers, it needs to be pointed out that the profitability implications on insurers’ balance sheet strength vary widely. There are indications that state-owned Indian insurers tend to be capitalised for the business they underwrite.”