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India's 7.3% GDP Growth to Boost Insurance Demand and Household Incomes

Moody's Ratings forecasts India's economy will grow by 7.3% in the fiscal year ending March 2026, up from 6.5% the previous year. This robust economic expansion is expected to increase average household incomes and subsequently fuel demand for insurance products. The report highlights that insurance premium revenue has already surged 17% in the first eight months of the fiscal year, driven by strong growth in life and health segments. Government reforms, including potential stake sales and mergers of state-owned insurers, alongside increased digitisation and a higher foreign investment cap, are poised to further strengthen the sector's profitability and accessibility.

Key Points: India's 7.3% GDP Growth to Fuel Insurance Sector Demand

  • 7.3% GDP growth forecast for FY26
  • Insurance premium revenue rose 17% to Rs 10.9 lakh crore
  • Digitisation widening access to insurance
  • Government reforms targeting state insurer profitability
  • Foreign investment cap in insurers raised to 100%
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India's 7.3 pc GDP growth in FY26 to fuel insurance demand, raise household income: Report

Moody's report forecasts 7.3% GDP growth for India in FY26, boosting household incomes and driving strong premium growth in the insurance sector.

"We expect India's economy to grow by 7.3 per cent in FY 2025... This will increase average incomes and support demand for insurance. - Moody's Ratings"

New Delhi, Jan 19

India's economy will expand 7.3 per cent in the current fiscal year and stronger growth will boost household incomes and support rising demand for insurance, a report said on Monday.

The report from global Credit rating agency Moody's Ratings said India's insurance sector is set to see a shift from current weak profitability due to sustained premium growth on the back of robust economic expansion, increased digitisation, tax changes.

"We expect India's economy to grow by 7.3 per cent in FY 2025 (year to March 2026), up from 6.5 per cent the previous year. This will increase average incomes and support demand for insurance," the ratings agency said.

The planned reform of the dominant state-owned insurance sector will also fuel the shift in insurance sector. The premium revenue already rose 17 per cent to Rs 10.9 lakh crore in April-November 2025, driven by a 20 per cent increase in life new‑business premiums and a 14 per cent rise in health premiums.

The report highlighted the rise in acceleration relative to 2024-25, when premiums rose 7 per cent to Rs 11.9 lakh crore.

Moody's noted that per‑capita GDP grew 8.2 per cent in FY2024-25 to $11,176, and said digitisation is widening distribution and access to insurance products in line with the regulator's "Insurance for All" objective.

The rating agency noted government moves to improve state insurers' profitability including a minority stake sale in LIC and proposed recapitalisations subject to improvement in underwriting performance.

Other proposed measures include the potential merger or privatisation of state-owned insurers.

The increase in the foreign investment cap in insurers to 100 per cent from 74 per cent should enhance their financial flexibility, the report noted.

The ratings agency had earlier said in a report that decrease in effective GST rates, however, could enhance private consumption and support India's economic growth.

- IANS

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Reader Comments

P
Priya S
Great to see the positive outlook. However, I hope this increased demand for insurance translates to better and more affordable products for the common person. Sometimes premiums feel too high for the coverage offered. The focus should be on value, not just volume. 🤞
R
Rohit P
The 17% premium growth is impressive! Digitisation is definitely a game-changer. I bought my first term plan entirely online last year - seamless process. More competition from foreign players with the 100% FDI cap should lead to innovation and better customer service.
S
Sarah B
As someone who works in finance, the reforms in the state-owned insurance sector are long overdue. Improving their profitability is key. The LIC stake sale and potential mergers could bring much-needed efficiency. Strong public insurers are vital for financial stability.
V
Vikram M
Per-capita GDP crossing $11,000 is a significant milestone. When people have more money in hand, thinking about security for family's future becomes a priority. Health insurance growth at 14% shows people are becoming more aware after the pandemic experience.
K
Karthik V
While the report is optimistic, the benefits of this growth must reach the middle and lower-middle classes in tangible ways. Higher income should not just mean higher premiums. Tax changes mentioned need to be consumer-friendly to truly boost consumption and insurance uptake.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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