Moody's Investors Service Tuesday said India's insurance and reinsurance sectors will grow strongly driven by strong economic growth and evolving regulatory regime.
It said robust GDP expansion, coupled with current low insurance penetration, should support double digit growth for the non-life sector over the next 3-4 years.
During fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5 per cent to Rs 6.1 lakh crore (USD 94 billion), bringing the 5-year compound annual growth rate (CAGR) to 11 per cent.
"India's strong economy and evolving regulatory regime continue to support growth for its insurance and reinsurance sectors," Moody's said in a report titled Insurance -- India:Continued regulatory evolution is credit positive for India's insurance sector.
Moody's said it expects India's real GDP to expand by 7.4 per cent and 7.3 per cent in fiscal 2019 and 2020, making the Indian economy one of the world's fastest-growing.
"The Insurance Regulatory and Development Authority of India (IRDAI) is proactively introducing regulations that will support insurers' balance sheets and improve their access to capital, a credit positive," Moody's Assistant VP and Analyst Mohammed Londe said.
Liberalisation of the reinsurance sector -- with the admission of foreign reinsurers since 2017 and IRDAI's steps to ensure that they can compete with incumbents -- will specifically benefit the non-life sector.Regulatory reforms will also improve the sector's capital strength, Moody's said.
"In 2015, IRDAI raised the ceiling on foreign ownership of Indian insurers to 49 per cent from 26 per cent, encouraging global players to buy holdings in local entities.
Besides, the government's launch of a new program in 2018 to provide health insurance for 100 million families is credit positive as it will help grow health premiums and provide insurers with cross-selling opportunities, it noted.
