Moody's — Rising premium growth and government reforms will strengthen Indian insurers’ profitability – Yahoo Finance
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Research Announcement:
Moody’s — Rising premium growth and
government reforms will strengthen Indian insurers’ profitability
DIFC – Dubai, January 19, 2022 —
» Growth prospects are favorable in the months ahead, supported by strong GDP expansion in
India and demand for health insurance
» Government efforts to liberalize the largely state-owned sector will improve underwriting and
market discipline, which will help boost prices
India’s post-pandemic recovery will sustain growth in insurance premiums, improving profitability
amid favorable government reforms to the state-owned insurance sector, according to a new report
by Moody’s Investors Service.
“The Indian insurance industry’s growth prospects are favorable, underpinned by an expected 9.3%
GDP expansion in fiscal 2021, which ends March 2022, and by strong demand for health insurance
in the wake of the pandemic,” says Mohammed Ali Londe, a Moody’s Vice President and Senior
Analyst.
Total premiums grew 9% in the first nine months of fiscal 2021, slightly ahead of the 8.6% increase
in fiscal 2020, with general insurance premiums (including health) up 11% and life new business
premiums rising 7%. Robust premium growth is positive for Indian insurers’ profitability, which is
currently weak because of persistently low prices and the rising cost of claims.
Meanwhile, the government’s plans to recapitalize India’s dominant state-owned insurers and list
the country’s biggest insurer, Life Insurance Corporation of India (LIC), on the stock market will
encourage a more disciplined approach to underwriting in the respective general and life insurance
sectors. This will pave the way for price increases across the market, further supporting insurers’
profitability.
Rising premiums and prices, in turn, will help insurers absorb higher claims, which pushed the
average net loss ratio for general insurers to 95% in the first three months of fiscal 2021 from 81% in
the previous year. In anticipation of profitable growth opportunities, 20 of India’s 34 general insurers
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and four of its 24 life insurers raised capital in fiscal 2020. Insurers will continue such transactions in
the coming months, which will improve the Indian insurance sector’s capital adequacy and financial
flexibility.
Subscribers can access the report at:
http://www.moodys.com/researchdocumentcontentpage.aspx?
docid=PBC_1313835
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Mohammed Ali Londe
Vice President – Senior Analyst
Financial Institutions Group
Moody’s Investors Service Middle East Limited
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Benjamin Serra
Senior Vice President
Financial Institutions Group
Moody’s France SAS
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
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