SINGAPORE, May 21 (Bernama-BUSINESS WIRE) -- AM Best is maintaining a negative market segment outlook on India’s non-life insurance sector. Key factors underpinning the outlook include the sector’s strong competition, poor pricing discipline in core business lines, reliance on investment activities for profitability and the economic fallout from the COVID-19 pandemic.
A new
Best’s Market Segment Report, titled, “Market Segment Outlook: India Non-Life,” states that aside from investment market pressures expected to result from the COVID-19-driven economic turbulence, non-life insurers also face uncertainty and challenges in other areas of their businesses. Although AM Best expects insurance premiums in India to continue to grow in the medium term, recent and further periods of mandatory lockdowns to curb the spread of COVID-19 are likely to drive a slowing and uneven pattern for premium growth in the short term.
Existing pressures on the underwriting performance of non-life insurers–particularly for the health line of business–are likely to be exacerbated by COVID-19-related claims, although the extent of the impact will remain closely tied to the scale and longevity of the pandemic. Nonetheless, AM Best expects that non-life insurers will gain some respite in motor claims experience with reduced road activity during the lockdown period.
The restructuring of several large state-owned non-life insurers has been a plan in the works for many years. Whilst the eventual timing and format of the planned changes remains to be finalised, the resulting insurance operation would be mammoth in terms of size and scale. Consequently, AM Best expects this transaction to create disruption in the non-life market, as the state-owned companies involved in the transaction are likely to face significant integration and business interruption challenges that could persist for a prolonged period.
Overall, AM Best expects the India non-life market to face several headwinds over the medium term. Some of these factors, including an unhealthy reliance on unrealised and realised gains from high-risk investment classes to offset underwriting losses, have been prevalent for a number of years. However, more recent market dynamics, including heightened economic uncertainty and COVID-19 implications, are expected to weigh further on India’s non-life insurance market. Although the segment consists of a diverse range of insurance companies, the general operating environment in India in the short term is likely to present clear challenges for non-life insurers’ earnings and capital positions.
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http://www3.ambest.com/bestweek/purchase.asp?record_code=297272.
To view current Best’s Market Segment Outlooks, please visit
http://www.ambest.com/ratings/RatingOutlook.asp.
AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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https://www.businesswire.com/news/home/20200520005556/en/ContactYuan TianFinancial Analyst+65 6303 5016yuan.tian@ambest.comMyles GouldDirector, Analytics+65 6303 5020myles.gould@ambest.comChristopher SharkeyManager, Public Relations+1 908 439 2200, ext. 5159christopher.sharkey@ambest.comJim PeavyDirector, Public Relations+1 908 439 2200, ext. 5644james.peavy@ambest.comSource : AM Best
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