Non-life insurers to see double digit growth for next 3-4 years: Moody's analyst

The non-life insurance industry is expected to register double-digit growth for the next three to four years, a Moody's analyst has said.

In an interaction with Moneycontrol, Mohammed Ali Londe, Assistant Vice President-Analyst, EMEA Insurance, Moody's said that the sector will benefit from the liberalisation of reinsurance regulations as well as risk-based capital (RBC) regime.

"With more reinsurance capacity coming from abroad, this will bring in more product offerings as well as sophistication to the market. This will enable Indian companies to also diversify into other product areas," he said.

The general insurance market has grown at 16-18 percent over the last two years. This has been aided by strong growth in segments like motor, health as well as crop insurance.

A report by Moody's in November had said that the non-life insurance sector is more fragmented then the life insurance sector, with the top ten insurers accounting for over 77 percent of premiums.

In the life sector, on the other hand, a single insurer commands around 72 percent of the market, while the top five players account for around 90 percent between them.

State-owned insurers are influential in both markets, bringing in around 48 percent non-life and 72 percent of life premiums in FY17.

Once RBC is implemented, Londe explained, some companies will have to shore up capital to deal with the risky business that is undertaken and also do actuarial reserves reporting. He added that reinsurance companies will also be selective in the risks they write.

"There are also smaller companies which may merge with larger companies or exit the industry. Mergers and acquisitions (M&A) will happen in the sector in the future," he said.