SME Times is powered by   
Search News
Just in:   • Markets open on a positive note Wednesday morning  • Paswan interacts with industry on new consumer protection act  • Nelco brings in-flight communication to India  • Taxing retirement income of employees a retrograde step  • 'Listed realty firms log steady sales growth in Q3FY20' 
Last updated: 23 Jan, 2020  

Insurance.Thmb.jpg Slowdown to affect insurance sector: Report

   Top Stories
» Paswan interacts with industry on new consumer protection act
» Prime Minister Modi visits Hunar Haat
» District committees, Centre to work closely to push skill devt
» Handicrafts exhibitions in various parts of country
» Exports from SEZ achieve $100 bn mark in 2019-20
SME Times News Bureau | 22 Jan, 2020
The slowing Indian economy will weigh on insurance premium growth over the next two-three years, Moody's Investor Service said on Tuesday but added that supportive measure taken by regulator IRDAI will help counterbalance the deteriorating economic environment.

"India's GDP (gross domestic product) growth weakened to its slowest rate in five years in the fiscal year ending March 2019, and the resultant financial pressure on rural households amid weaker job creation is in turn also weighing on premium growth," said Moody's Senior Vice President Benjamin Serra.

According to the latest estimates by the Indian Statistics Department, the economy will grow at 5 per cent in the current fiscal ending in March, slower than the 6.8 per cent growth recorded in 2018-19. GDP growth fell to a six-and-a-half-year low in the quarter ended September.

However, low insurance penetration rates in India also suggest there is still ample room for growth. According to Moody's, health premiums are likely to increase due to the government's Ayushman Bharat scheme that was launched in September 2018.

Billed as the world's largest health assurance scheme, Ayushman Bharat aims to provide free health insurance of Rs 5 lakh per family to nearly 40 per cent of the population --more than 100 million poor and vulnerable families each year.

"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 and reinsurance companies," Serra said.

Moody's further said that the insurance regulator has taken series of measures, which includes removing the limit on foreign ownership stakes in Indian insurance intermediaries. The step, announced in the Union Budget in July 2019, is aimed at bringing in global products, practices, and sales strategies to India's insurance sector.

"IRDAI also plans to introduce a new risk-based capital (RBC) regime with similar principles to Solvency II in Europe. This is likely to improve Indian insurers' risk management, a credit positive. While many of the large private insurers have already adopted a risk-based approach to managing capital, we expect the new system will pose some implementation hurdles, particularly for smaller insurers," Moody's said.

This could encourage market consolidation, further enhancing the competitive advantage of larger players, it added.
Print the Page
Add to Favorite
Share this on :

Please comment on this story:
Subject :
(Maximum 1500 characters)  Characters left 1500
Your name:

  Customs Exchange Rates
Currency Import Export
US Dollar
UK Pound
Japanese Yen 58.85 56.85
As on 20 Feb, 2020
  Daily Poll
Ease of doing business improved in last one year
 Can't say
  Commented Stories
» MSME credit gets a boost (2)
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter