Expressing confidence about the country’s insurance sector, global ratings agency Moody’s on Tuesday said it will grow strongly on the back of robust GDP growth and evolving regulations.

Projecting real GDP growth at 7.4 per cent and 7.3 per cent in 2018-19 and 2019-20 respectively, Moody’s Investor Service in a report said, “This, coupled with the current low insurance penetration, should support double digit growth for the non-life sector over the next three to four years.”

During fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5 per cent to Rs 6.1 trillion, bringing the five-year compound annual growth rate to 11 per cent, it noted.

“Liberalisation of the reinsurance sector -- with the admission of foreign reinsurers since 2017 and IRDAI's steps to ensure that they can compete with incumbents -- will specifically benefit the non-life sector,” said the report titled ‘Insurance -- India: Continued regulatory evolution is credit positive for India's insurance sector’.

Moody’s also believes that regulatory reforms will improve the sector's capital strength. In 2015, IRDAI raised the ceiling on foreign ownership of Indian insurers to 49 per cent from 26 per cent, encouraging global players to buy holdings in local entities.

Additionally, the Ayushman Bharat scheme will also give an impetus to health insurance and will provide cover to 100 million families. “This is credit positive as it will help grow health premiums and provide insurers with cross-selling opportunities,” said the report, but noted that as most states plan to run it on the trust model, it will limit the full growth potential for insurers.

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