Moody’s paints a rosy picture about non-life insurance sector

Source: The Hitavada      Date: 29 Nov 2017 10:01:16



NON-LIFE insurance sector is likely to maintain its double digit growth over the next three to four years, aided by a higher economic expansion and increased household spending, says a report. The global rating agency Moody’s, in its report, has projected that GDP will grow at 6.7 per cent this fiscal year. After nearly 14 years, the agency upgraded the sovereign ratings to Baa2 with stable outlook from Baa3, a fortnight ago. However, it can be noted that rival agency S&P had retained its BBB- ratings and stable outlook. “Economic expansion supports premium growth.

We expect the non-life sector's double digit growth to continue over the next three-four years, driven by continued economic expansion and an associated increase in household spending,” Moody’s said in its first report on the domestic insurance sector. “We expect real GDP to expand by 6.7 per cent in the fiscal year ending March 2018, making it one of the world’s fastest-growing economies,” it added. It however noted that annual insurance penetration remains comparatively low at just 3.5 per cent of GDP, but is likely to increase in line with household spending. Last fiscal, top 10 non-life insurers reported 30 per cent growth in gross premia to Rs 1,00,930 crore, while their top five life counterparts reported a 14 per cent spike in gross premia at Rs 3,74,080 crore.

“Strong growth that the non-life sector has been witnessing will continue," it said, adding in the year to March 2017, the combined 5-year CAGR of the top 10 players in gross premia stood at 16 per cent, while gross premia grew 30 per cent annually. The large private insurers have benefited the most, growing premia by 42 per cent year-on-year in the year to March 2017. These insurers are well placed for continued expansion, given their strong brands and market positions,” the report noted.