Topic 7: INSURANCE: UNCERTAINITY PAYS

The Indian insurance industry showed impressive growth and resilience in December 2024, fuelled by multiple factors across both life and non-life sectors. The sector is expected to grow at an average annual rate of 7.1% between 2024 and 2028, positioning India as one of the fastest-growing insurance markets in the G20. This expansion is largely due to a favourable economic environment, increasing demand from the expanding middle class, and supportive regulatory frameworks. In the life insurance segment, new business premiums rose by 15.67%, driven by a surge in demand for life coverage, especially among the middle-income demographic. Rising awareness and the integration of technology in insurance services, or insurtech, have also contributed to this growth. However, overall growth for FY24 is projected at 4.1%, a slowdown from 5.9% in FY23. This is attributed to reduced risk awareness following the pandemic and changes in tax policies affecting high-value policies. The non-life insurance segment, on the other hand, is set to grow by 8.3%, boosted by improvements in distribution networks and government support. Health insurance premiums are expected to rise by 9.7%, reflecting growing coverage needs. Despite challenges such as inflation and high-interest rates impacting consumer spending, the non-life sector is anticipated to experience double-digit growth in 2025 due to regulatory changes and new, innovative products. A notable development in December was the General Insurance Corporation of India (GIC) stock price increase by 25.81% over the month, outperforming broader market indices. However, challenges such as low insurance penetration—estimated at 3.8%—and a substantial protection gap, with 93% of natural disaster risks uninsured, persist. Cyber insurance emerged as a key trend in 2024, with rising demand as businesses become more aware of the risks posed by cyber threats. Overall, December marked a period of optimism and growth for India’s insurance sector, with significant increases in premiums across both life and non-life insurance



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