Rising premium growth, govt reforms to strengthen insurers' profitability: Report

Post-pandemic recovery will sustain growth in insurance premiums, improving profitability amid favourable government reforms in the state-owned insurance sector, according to a report. "The Indian insurance industry's growth prospects are favourable, underpinned by an expected 9.3 percent GDP expansion in fiscal 2021, which ends March 2022, and by strong demand for health insurance in the wake of the pandemic," Moody's Investors Service said in the report.

Total premiums grew nine percent in the first nine months of fiscal 2021, slightly ahead of the 8.6 percent increase in fiscal 2020, with general insurance premiums (including health) up 11 percent and life new business premiums rising seven percent, it said. Robust premium growth is positive for insurers' profitability, which is currently weak because of persistently low prices and the rising cost of claims, it said.

Meanwhile, the government's plans to recapitalise 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, it said. This will pave the way for price increases across the market, further supporting insurers' profitability, it said.