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FOR IMMEDIATE RELEASE
SINGAPORE - FEBRUARY 14, 2017 07:42 AM (EST)
A three-year trend of performance improvements in India’s non-life market has come to a halt, as reflected by weakening industry profitability ratios since 2015. According to a new A.M. Best briefing, this could result in a reduction in insurance companies’ risk-adjusted capitalization positions as insurance risk growth (approximated by premiums) outpaces capital growth.
The Best’s Briefing, titled, “Performance in the Indian Non-Life Market is Stalling,” states that premium growth in India’s non-life insurance market has been led by the unprofitable health insurance business, which has grown into the single largest business line, ahead of motor own damage. This has added to insurance risk growth in the market but has not contributed to capital growth. It will be interesting to see how the new government-supported crop insurance scheme will impact this dynamic.
The performance deterioration seems to be mostly concentrated among the better capitalized government-owned insurers, which roughly underwrite 50% of the market’s non-life insurance risks, while holding slightly more than 70% of the industry’s capital and surplus. Nevertheless, improving operating performance is important for these players as their risk-adjusted capitalization is on a declining trend and the high proportion of fair value reserves leaves their risk-adjusted capitalization more vulnerable to capital market volatility.
To access the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=258482 .
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.