(MENAFN- KNN India)
New Delhi, Jan 21 (KNN) Moody's Ratings has forecast a robust 7 percent growth for the Indian Economy in the current fiscal year, highlighting strong economic fundamentals that are expected to drive significant expansion in the insurance sector.
The rating agency's latest report, released on Monday, emphasizes that this growth trajectory, although slightly lower than the previous year's 8.2 percent, will continue to fuel premium growth across insurance segments.
The analysis points to several positive indicators in India's economic landscape, including a notable 11 percent year-on-year increase in GDP per capita at purchasing power parity, reaching USD 10,233 in FY2023.
This economic momentum has already manifested in the insurance sector, with total premiums growing by 16 percent in the first eight months of 2024, substantially outpacing the 8 percent growth recorded in FY 2023.
Moody's anticipates that ongoing reforms in India's state-owned insurance sector will lead to price adjustments, potentially improving the industry's currently subdued profitability.
While private sector insurers maintain strong solvency positions, the agency notes that increased underwriting exposure and regulatory changes may place some pressure on their capital adequacy ratios.
Looking ahead, Moody's projects India's GDP growth to moderate to 6.6 percent in FY 2025-26. This forecast aligns with the National Statistics Office's first Advance Estimates, which predict 6.4 percent growth for the current fiscal year ending March 2025.
The agency identifies rising consumer awareness and higher average incomes as key drivers for insurance demand, particularly in the health insurance segment.
Despite positive growth indicators, the report highlights significant untapped potential in India's insurance market. While insurance density increased to USD 95 per capita in FY 2023 from USD 92 in FY 2022, the overall insurance penetration rate stands at just 3.7 percent of GDP.
This figure remains substantially below developed markets such as the United Kingdom at 9.7 percent and the United States at 11.9 percent, suggesting considerable room for expansion in the Indian insurance sector.
(KNN Bureau)
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