India non-life insurance market outlook maintained negative - AM Best

KUALA LUMPUR, May 21 -- Global credit rating agency, AM Best has maintained a negative market segment outlook on India’s non-life insurance sector.

Key factors underpinning the outlook include the sector’s strong competition, poor pricing discipline in core business lines, reliance on investment activities for profitability and the economic fallout from the COVID-19 pandemic, according to a statement.

This is according to Best’s Market Segment Report titled, ‘Market Segment Outlook: India Non-Life’ stating that aside from investment market pressures expected to result from the COVID-19-driven economic turbulence, non-life insurers also face uncertainty and challenges in other areas of their businesses. Although AM Best expects insurance premiums in India to continue to grow in the medium term, recent and further periods of mandatory lockdowns to curb the spread of COVID-19 are likely to drive a slowing and uneven pattern for premium growth in the short term. Existing pressures on the underwriting performance of non-life insurers – particularly for the health line of business – are likely to be exacerbated by COVID-19-related claims, although the extent of the impact will remain closely tied to the scale and longevity of the pandemic. The restructuring of several large state-owned non-life insurers has been a plan in the works for many years. Whilst the eventual timing and format of the planned changes remain to be finalised, the resulting insurance operation would be mammoth in terms of size and scale. Overall, AM Best expects the India non-life market to face several headwinds over the medium term. Some of these factors, including an unhealthy reliance on unrealised and realised gains from high-risk investment classes to offset underwriting losses, have been prevalent for a number of years. -- BERNAMA