In the same period, the total insurance premiums in India are expected to grow by an average of 14% per annum in nominal local currency, making India the 6th largest in terms of total premium volume by 2032 from the 10th largest in 2021, the report said.
“The growth will slow down slightly in 2022 to 4.5 per cent, mainly due to high inflation. However, the sector is further expected to witness a growth of close to 8 per cent Compounded Annual Growth Rate (CAGR) between 2023 and 2032,” it said. The systematic change in India’s non-life insurance sector brought by the pandemic is a driving factor behind the growth. It resulted in a greater risk awareness leading to higher demands in health insurance, making it the biggest Line of Business (LoB) by premium volume in 2021.
The Indian life insurance industry is expected to grow at an exceptional rate of 6.6 per cent (real terms) in 2022 and further grow at 7.1% in 2023. At the projected growth rate, the life insurance premiums in India are set to cross USD 100 billion for the first time in 2022, it said.
The non-life insurance market has returned to a growth of 5.8%(real terms) in 2021 after a slight contraction in 2020.
The global economy is on the brink of inflationary recessions, with policymakers facing an increasingly difficult inflation-growth trade off. However, it is expected that India will reign as the world’s fastest-growing economy in 2022.
Inflation and monetary policy tightening are driving long-term sovereign bond yields higher, with markets pricing in both higher real yields and inflation expectations, it said, adding, insurers will, over time, benefit from higher investment returns that will help offset the higher claims cost.