Global reinsurance major Swiss Re in its January 2025 update has estimated India’s insurance market to be the fastest growing among G20 countries over the next five years with premium growth (life and non-life) at 7.3 per cent in real terms on an average each year.

However, growing natural catastrophe risks are emerging in Gujarat, Maharashtra, Tamil Nadu and Delhi, where there is a high concentration of industrial clusters, logistics infrastructure and renewable energy projects.

“Life (insurance) is the mainstay of India’s insurance market, accounting for 74 per cent of total premium volumes. We estimate that life premiums will grow 4.8 per ent in 2024 in real terms and by 5 per cent in 2025. This follows muted growth of 0.7 per cent in 2023, when the savings segment was negatively impacted by regulatory and taxation changes,” Swiss Re said in its report.

“On the non-life side we estimate that premium growth will remain stable at 5.7 per cent in 2024 and pick up to 7.3 per cent in 2025,” the report said.

The report further said instances of floods, cyclones and earthquakes are increasing, leading to physical damage, disruption of supply chains and business losses. “In 2023, natural catastrophes inIndia caused overall economic losses of $12 billion, above the previous 10-year average of $8 billion,” the report said.

The report also said that profitability in the life insurance business is expected to remain under pressure with the value of new business margins slipping in the first two quarters after the new surrender value norms coming into effect in October 2024.

“The rollout of EOM (expenses of management) has led to severe price erosion in property, crop, group health and other commercial lines. Motor topline growth is also slowing due to lower passenger vehicle sales.

“A rekindling of inflation on the back of geopolitical tensions may increase claim costs and pressurise margins in shorter tail motor and property lines,” the report cited as risks to profitability on the non-life side.

“The rapid pace of India’s economic growth has moved faster than actions taken to reduce vulnerabilities posed by natural catastrophes. Identification and accurate assessment of risk accumulation in hotspots are crucial to strengthening resilience and the reinsurance industry plays an important role,” said Mahesh H. Puttaiah, head of insurance market analysis, Swiss Re.