India’s economy is expected to grow at a rate of 7.3 per cent in the current fiscal year, i.e., FY 2025-26, as per Moody’s Ratings in its latest report. The strong economic expansion will push average
household income up and stimulate demand for insurance protection.
The agency said that the strong premium growth, benefited from digitization and tax changes, will boost India Insurance companies’ profitability.
However, the agency cautioned that there will be some pressure on Indian insurance companies in terms of capital adequacy.
Moody’s said the rise in premium income also shows that Indian consumers are becoming more aware of risks, while the economy continues to move steadily towards digitisation.
Greater digitisation has made it easier to sell and distribute insurance products, improving access for customers. This aligns with the insurance regulator’s goal of achieving “Insurance for All” by 2047.
The government is working to improve the profitability of state-owned insurance companies, which play a major role in India’s insurance market. It has already sold a minority stake in Life Insurance Corporation of India (LIC) and plans to recapitalise some public sector insurers, but only if they improve their underwriting performance. The government is also considering options such as merging or privatising certain state-owned insurers.
Moody’s added that raising the foreign direct investment (FDI) limit in insurance companies to 100 per cent from 74 per cent would give insurers more financial flexibility and help strengthen their balance sheets.
