Indian insurance companies are likely to withstand the economic downturn exacerbated by the coronavirus pandemic, with general insurance premium growth in positive territory, Moody’s Investors Service report has said.
The report said that general insurance premium growth has been in the positive territory due to the persistent strong sales of health and protection cover.
It noted that resilient sales of health and protection policies reflected the rising consumer awareness about these products during the pandemic, as well as regulator’s actions in enabling the insurers to offer protection against the virus.
The Indian insurers have also rapidly developed their digital offerings during the pandemic, the report added.
Mohammed Ali Londe, Moody’s Vice President and Senior Analyst, said: “Although the economic slowdown had had an adverse impact on the Indian insurers, with general insurance growth slowing to 2.5 per cent and life insurers’ new business premiums falling by 1.7 per cent in the nine months till December 2020, we expect general insurance premium growth to remain in the positive territory due to persistently strong demand for health and protection coverage.”
Over the longer term, the industry may benefit as the central government injects capital into publicly owned insurers, and as private insurers reinforce their solvency through a combination of raising of capital and M&A, the report said.
Moody’s has said that India’s real GDP may contract by 10.6 per cent in FY21.
“We expect general insurance premium growth to remain in positive territory. Persistently strong demand for health and protection coverage will support general and life insurance premiums,” it said.
Health premiums rose 13.7 per cent in the fiscal’s nine months up to December 2020, supporting general insurance premium growth.