SINGAPORE, May 29 (Bernama-BUSINESS WIRE) — AM Best is maintaining a negative market segment outlook on India’s non-life insurance market, supported by key factors that include continued reliance on realized and unrealized investments gains to offset technical losses, potential short-term disruption from regulatory enhancements and persistently competitive and underperforming core business lines of motor and agriculture.
As detailed in a new Best’s Market Segment Report, titled “Market Segment Outlook: India Non-Life Insurance,” India’s non-life insurers have been one of the main beneficiaries of the country’s fast-growing economy, and the industry has seen a substantial increase in insurable risks, largely driven by compulsory agriculture insurance. However, heavy competition and cumbersome regulatory hurdles for product development hinder technical performance, with most companies relying on strong investment income derived from the exceptional performance of Indian equities, which have shown sustained outperformance relative to global indices. The market’s combined ratios has fluctuated between 110 and 125 over the past five years, and most insurers have become dependent on investment income to generate profitability. The sustainability of such earnings may put the long-term viability of many insurers into question.