BUSINESS

Slowing economy to hit premium growth: Moody’s

Ample room for growth, says agency

Moody’s Investors Service said that the country’s slowing economy will weigh on insurance premium growth over the next 2-3 years while the supportive measures put in place by the Insurance Regulatory and Development Authority of India (IRDAI) will help counterbalance the deteriorating economic environment.

“India’s GDP growth weakened to its slowest rate in five years in the fiscal year ended March 2019, and the resultant financial pressure on rural households amid weaker job creation is in turn also weighing on premium growth,” says Benjamin Serra, a Moody’s senior vice-president.

“Nevertheless, the country’s low insurance penetration rate suggests ample room for further growth, while supportive government and regulatory initiatives are also helping mitigate the currently challenging environment for Indian insurance firms,” the report said. Health premiums, in particular, are likely to increase as a result of Ayushman Bharat, it said.

Also, IRDAI has put in place a series of measures, including the removal of the limit on foreign ownership in Indian insurance intermediaries, which will strengthen distribution.

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