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FOR IMMEDIATE RELEASE
SINGAPORE - MAY 28, 2021 08:21 AM (EDT)
AM Best is maintaining its negative market segment outlook on India’s non-life insurance industry as the ongoing COVID-19 pandemic is likely to exacerbate pressure on India non-life insurers’ underwriting and investment performance.
In the new Best’s Market Segment Report, “India Non-Life Insurance,” AM Best states that historically, India’s economic growth fundamentals have spurred non-life insurance market expansion. However, in fiscal year 2021, despite India’s GDP contracting by approximately 8%, the non-life insurance market achieved a positive, albeit muted, growth rate of over 5%. Prospectively, AM Best expects the trajectory of non-life insurance premiums in India to continue to be one of growth over the long term with rising consumer awareness and accessibility of insurance products.
Notwithstanding this, factors supporting AM Best’s negative outlook on India’s non-life insurance market include competitive market conditions, persistently poor pricing discipline and reliance on investment activities for profitability, which have been prevalent for a number of years. More-recent market dynamics also include heightened economic uncertainty and COVID-19 implications, which are expected to weigh further on non-life insurers. Although the segment consists of a diverse range of insurance companies, the general operating environment in India over the short term will present clear challenges for non-life insurers’ earnings and capital positions.
Positive factors partially offsetting this assessment include government and regulatory initiatives aimed at increasing insurance penetration and accessibility through new products and schemes. Additionally, AM Best expects regulatory and market advancements to continue to drive investment in digital infrastructure, which will likely support India non-life insurers’ online sales, operations and risk management.
Overall, AM Best expects the India non-life market to face several headwinds over the medium term. Factors that could lead AM Best to revise its segment outlook to stable from negative include evidence of sustainable improvement in underwriting performance, supported by better pricing discipline, as well as an improved balance of overall earnings and stabilised economic indicators.
To access a full copy of this market segment report visit http://www3.ambest.com/bestweek/purchase.asp?record_code=309041 .
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.