FINANCEOUTLOOKINDIANOVEMBER, 20239AM Best stated in a report that growth and rate increases in health, auto, and fire insurance fueled significant performance, noting that the industry expanded 16.4 percent in FY23 vs 11.1 percent in FY22. According to the analysis, underwriting margins are projected to continue restricted by excessive market competition, price inadequacy, and an increase in reinsurance costs. These bottom-line pressures may be countered by investment returns, which are expected to remain a significant contribution to overall earnings."Growth in the non-life segment is likely to be supported by regulatory moves to increase insurance penetration and promote financial inclusion,:" the authors of the research stated. The sector outlook was upgraded shortly after the rating agency revised its outlook on General Insurance Corporation (GIC Re) to positive due to an improvement in its financial sheet and operating performance. Following the review, GIC shares increased by one-third.At the end of FY23, India's non-life premium was INR 2.6 Lakh crore (USD 31.2 Billion), corresponding to a non-life insurance penetration rate of about 1 percent. The Insurance Regulatory and Development Authority's (IRDAI) decision to allow insurers to develop their own products through a 'use and file' approach has resulted in a slew of new product innovations and launches.According to industry participants, the regulator has assigned domestic insurance companies premium growth targets to help reach this goal, but actual achievement is contingent on the insurers' capacity to do so sustainably," said AM Best.The report also mentions the regulator's other strategic themes, which include making appropriate products available to customers, promoting more standardized and accessible insurance products, including microinsurance, facilitating ease of doing business through a willingness to attract new insurance players, and enhancing distribution efficiency through technology.
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