India insurance market sees moderating premium growth: Report

Growth in key lines is being weighed down by a slowdown in agriculture and motor.

India's insurance market is experiencing moderating premium growth and persistent underwriting losses, even as the government aims for the country to become the world's sixth-largest insurance market within a decade, Gallagher Re’s Asia-Pacific Market Watch said.

Growth in key insurance lines is being weighed down by a slowdown in sectors like agriculture and the motor industry, alongside medical inflation in healthcare. 

This moderation in Gross Written Premium (GWP) is compounded by ongoing underwriting losses across many lines, keeping the industry's combined ratio well over 100%. 

This forces insurers to rely heavily on investment returns for profitability.

A new 50% US tariff on Indian exports, imposed in August, is expected to weaken the rupee and increase market volatility, impacting key sectors like electronics and auto parts. 

For the non-life insurance industry, the effect is indirect: slower premium growth and higher claims costs are likely in trade-related lines due to lower demand, inflation, and disrupted supply chains.

Whilst penetration rates in India's commercial sector are comparable to developed markets, a significant challenge remains in broadening financial participation amongst the general public, particularly lower-income and rural populations. 

However, the fact that insurance penetration rates remain very low amongst large segments of the population presents a substantial opportunity for industry expansion. The regulator (IRDAI) is actively pursuing its 'Insurance for all by 2047' goal to address this.

Indian insurers are rapidly digitalising and developing apps and aggregator platforms to improve productivity and open new sales channels.

Meanwhile, the expansion of Gujarat’s GIFT City as a low-tax, light-touch international insurance hub is a key initiative. 

It offers favourable treatment and faster license approval to international reinsurers, which could significantly boost the industry, though its success against established offshore centres like Dubai remains to be proven.

The non-life industry's GWP grew by 6.2% in FY 2025 to INR3.1 trillion (USD35.9 billion), a drop from the previous year's growth rate. Health remains the largest segment at 38.6%, followed by motor at 32.2%. 

The government is simultaneously progressing reforms, including finalising plans to allow 100% foreign ownership in the sector.