AM Best reiterated the stable outlook for the Indian non-life insurance sector, citing favorable macroeconomic conditions and strong demand, supported by regulatory initiatives and reforms.
Although the sector’s growth slows in 2025 due to fire department pricing pressure, weak auto expansion and accounting changes in long-term policies, the rating agency said the sector’s growth momentum should improve as demand strengthens and financial inclusion reforms drive it.
AM Best explains: “A key provision of the recently passed Sabka Bima Sabki Raksha (Insurance Act Amendment Bill) 2025 increases the foreign direct investment limit in insurance companies from 74% to 100%. This is expected to attract more capital, enhance financial flexibility and enhance the solvency of the industry.”
AM Best’s findings echo comments by Prateek Singhal, executive chairman and head of reinsurance at Howden India, who said in an interview late last year that India’s re/insurance industry will see strong growth in 2026, driven by government initiatives, new insurance licenses and the emergence of GIFT City as a financial hub.
In 2025 alone, several global and domestic reinsurers have announced plans to open offices in GIFT City, underscoring confidence in India’s regulatory reforms and growth prospects.
It is no surprise that India is increasingly becoming a major center for the global re/insurance market, supported by supportive regulation, increasing infrastructure investment and the strategic advantages of GIFT City.
Chris Lim, associate director of analysis at AM Best, commented: “Despite the recent economic slowdown, India’s long-term economic outlook remains favorable for non-life insurance growth.
“The recent Goods and Services Tax reforms have directly supported insurance demand by reducing the tax rate on individual life and health insurance policies from 18% to 0%.
“Improving affordability, particularly of health insurance policies, is expected to significantly boost individual health insurance demand.”
Victoria Ohorodnyk, director of analysis at AM Best, said: “While increased foreign participation may initially increase competition, it may also accelerate innovation, efficiency and market maturity over time.”