India to emerge as sixth largest insurance market by 2032: Swiss Re – newsdubai

India will emerge as the sixth largest insurance market by 2032, Jérôme Jean Haegeli, Group Chief Economist, Swiss Re said on Thursday.

Currently, India is ranked tenth largest in the global list of countries by insurance premium volumes.

The expected rise in the rankings for India will be on the back of a likely 14 percent compound annual growth rate (CAGR) in insurance premiums over the next decade, said Haegeli, discussing the findings of the Swiss Re Institute’s latest Global Economic and Insurance Outlook report. Both structural factors and strong fundamentals will drive insurance growth in India, he added.

Haegeli, who is visiting India, said the Indian economy is expected to record an average growth of 7 percent over the next decade, and that bodes well for the growth of the insurance sector.

India’s life insurance market is expected to be the fifth largest by 2032. Swiss Re expects global life insurance premium growth to be almost flat this year and grow by 1.9 percent in real terms in 2023. However, the Indian life insurance industry will show resilience and grow at an unusual rate rate of 6.6 percent (in real terms) in 2022 and grow further at 7.1 percent in 2023. Considering the expected growth rate, life insurance premiums in India are set to cross $100 billion for the first time by 2022.

DAMAGE INSURANCE

In the area of ​​non-life insurance, Swiss Re expects a notable slowdown in growth in the personal lines this year. The group forecasts global growth in non-life insurance premiums to slow to 0.8 percent (in real terms) in 2022 from 2.6 percent in 2021. In India, the non-life insurance market returned to growth of 5.8 percent (in constant prices) in 2021 after a slight decline in 2020.

Growth slows slightly in 2022 to 4.5 per cent, primarily due to high inflation. However, the sector is further expected to grow at close to 8 percent CAGR (in real terms) between 2023 and 2032. One of the driving factors for the sector growth is the systematic change to India’s non-life insurance sector caused by the pandemic. This resulted in greater risk awareness, leading to higher demands for health insurance, making it the largest LoB (Line of Business) by premium volume in 2021.

GLOBAL ECONOMY

Haegeli said the Ukraine conflict worsened the short-term economic outlook. The global economy is on the brink of inflationary recessions, with policymakers facing an increasingly difficult trade-off between inflation and growth. Swiss Re expects India to reign as the world’s fastest growing economy by 2022, he added.

Hail said the insurance sector faces a mix of long-term tailwinds and short-term headwinds with impacts across segments, investment performance and balance sheet. On the positive side, investment income is expected to improve gradually as the rise in the yield curve contributes to bond portfolio returns.

The commercial and personal insurance industry will benefit from interest rate hardening, as claims inflation will penetrate this year and next. For life insurers, the profitability of large old savings products with guarantees will also improve under gradual tightening. On the downside, the Ukrainian and Russian markets will face significant loss of premium income due to the conflict and international sanctions. Furthermore, lower disposable income in high-inflation and slowing economies will affect purchasing power and slow demand for insurance products. Volatile equity markets this year and widening credit spreads are likely to lead to asset losses

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1 September 2022