Indian insurers look set to withstand the economic downturn, as general insurance premium growth will remain in positive territory and life premiums will remain broadly flat despite the weakening economy, says Moody’s Investors Service says in a new report.
“Although the economic slowdown has had an adverse impact on Indian insurers, with general insurance growth slowing to 2.5% and life insurers’ new business premiums falling by 1.7% in the nine months to December 2020, we expect general insurance premium growth to remain in positive territory thanks to persistently strong demand for health and protection coverage,” said Mr Mohammed Ali Londe, a Moody’s vice president and senior analyst.
Health premiums rose 13.7% in the nine months to December 2020, because of rising consumer awareness of these products during the COVID-19 pandemic and regulatory actions that enabled insurers to offer protection against the virus.
Indian insurers have also responded to the crisis by rapidly developing appropriate products and improving their digital offerings. This has led to an increase in sales of health and protection policies, which Moody’s expects will drive further growth in the future.
At the same time, some insurers’ solvency remains inadequate, prompting government plans to inject capital into three government-owned insurers. These insurers are National Insurance Co, Oriental Insurance Co and United India Insurance Co.
In the private sector, solvency concerns are driving M&A, while other players are planning public listings to raise capital.
“Over the long term, these steps will reinforce Indian insurers’ credit strengths, adding transparency and improve their risk management and governance standards,” said Mr Londe.