Swiss Re has predicted that India will have the fastest growth in the insurance sector among G20 countries from 2024 to 2028 due to the growing demand for term life cover and a young population.
“We expect strong growth in life business (premiums up 6.7% in 2024-28), supported by growing demand for durable life cover from the country’s middle class and young population, as well as increasing industry adoption of Insurtech,” Swiss Re Institute . said in a report.
Total insurance premiums will grow by 7.1% in real terms, well above the global (2.4%), emerging (5.1%) and advanced (1.7%) market averages, it said.
“Non-life premiums are expected to grow at an annual average of 8.3% during 2024-28, driven by economic growth, improvement in distribution channels, government support and a favorable regulatory environment,” it said adding that only in 2023, premium growth. moderated slightly from the previous year, reflecting still-in-process adjustments to the post-COVID-19 era. “We estimate that life premium growth has slowed to around 4.1% from 5.9% in 2022 as memories (ie, risk awareness) of the pandemic have faded, and a recent change in tax standards for high-ticket policies weighed on new premium growth. -life premium growth moderated slightly from 9.0% in 2022 to around 7.7% in 2023 as the market continued to stabilize following the pandemic.Macrodynamics such as high interest rates, and elevated retail and medical inflation also presented some headwinds to non-growth of the life sector , it said.
2023 growth
“We estimate that life premiums will grow by 4.1% in 2023, higher than the historical average (2012–21: 3.2%) but less than in 2022 (5.9%) due to the fading risk awareness and a recent change in tax standards for high. -note policies weighed new premium growth.
New business premiums, after being increased by 40% in the first quarter of 2022 year on year (joy), contracted in the fourth quarter (‒7.0% yoy). That momentum continued in 2023, with second quarter premiums down by 21.2% indeed, mainly due to a contraction in group business.10 Going forward, a proposal to limit the tax exemption of insurance income with a very high value (Rs 5 lakh annual premium) should negatively influence sales to high net worth Individuals (HNIs) who mainly invest in savings business.
Risks of natural disasters
Swiss Re also highlighted the growing risk of natural disasters including earthquakes, floods, tropical cyclones, drought and wildfires amid low protection for such risks “Our resilience analysis indicates that 93% of the exposures are uninsured.
The average annual economic loss over the last decade (2013–22) was USD 8 billion (inflation adjusted), 125% higher than the average of the previous decade (USD 3.8 billion, 2003–12), it noted.
Economic losses from natural disasters have been on an upward trend for many years, driven primarily by economic growth and rapid urbanization,” it said. India’s major cities have high population and asset concentrations, and many are exposed to multiple natural hazards. , it said, adding, “One challenge in bridging the large protection gap is limited awareness and perception of the risks. The industry also faces challenges in insurance, with a need for more granular data on existing natural disaster exposures, and establishing more robust modeling capabilities.” India has made strong progress in setting up early warning systems for tropical cyclones, but there is a long way to go on this. front for other dangers (eg, floods), it said.
The company also highlighted the role of the Indian government and insurance regulator in supporting industry growth. “Important among these is the ‘Insurance for all by 2047’ mission launched in November 2022, the main objective of which is to ensure that every citizen and business has an adequate insurance/solution. There are also initiatives to attract foreign interest to the market. These reforms, along with robust economic growth, should support further development and expansion of the insurance sector, it said.
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