LONDON - Monday, March 14th 2011 [ME NewsWire]
(BUSINESS WIRE)-- The full potential for growth in India’s non-life and life insurance markets is far from being reached, although the challenges to operating in a desirable, though competitive, market are mounting, according to a new report by A.M. Best Co.
The report, “India Market’s Rapid Growth Poses Profitability Issues,” suggests that the global financial downturn has impacted India’s insurance market to a far lesser degree than insurance markets in some other countries. India’s economic prospects continue to offer great opportunities for non-life and life insurers, with drivers including strong economic growth, which coincides with a growing middle class in the world’s second-largest population. However, the report adds, as the attractions of operating in an emerging economy become more evident to international insurers and reinsurers, the challenges facing companies operating in India are immense.
“Non-life insurance penetration is low because policyholders tend to feel there is little financial benefit from purchasing cover, and a growing number of insurers are competing for a relatively small consumer base. Motor and health insurance, in particular, have been loss making,” says Yvette Essen, head of market analysis.
Philip Chung, senior financial analyst, added: “Insurers appear to be taking steps to improve profitability, although A.M. Best believes underwriting results for non-life insurers are unlikely to turn positive in the foreseeable future. Non-life insurers have become dependent on investment return to compensate for poor underwriting results.”
The report also draws comparisons between India and China’s insurance markets. It examines regulation, reinsurance and distribution trends in India, and the role of public and private insurers. It discusses how an increase in the foreign direct investment limit could help insurers raise additional capital, increase resources and bring in new management skills and knowledge.
To access a copy of this report, please visit www.ambest.com/press/031402indiareport.pdf.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
Contacts
A.M. Best Co.
Philip Chung, CFA, +852 2827 3409
Senior Financial Analyst
philip.chung@ambest.com
Moungmo Lee, +852 2827 3402
General Manager
moungmo.lee@ambest.com
Yvette Essen, +(44) 20 7397 0322
Head of Market Analysis
yvette.essen@ambest.com
Rachelle Morrow, +1-908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
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