Boost for Insurance Stocks: As per Swiss RE, India Will Rank as the Sixth-Largest Insurance Market by 2032

A Swiss RE research that stated India is expected to overtake the United States as the sixth-largest insurance market in the next ten years gave insurance stocks new life on September 2 in an otherwise turbulent market.

Highlights

  • The strong economic growth and regulatory pressure would help overall insurance premiums in India increase by an average of 14% annually in nominal local currency values over the next ten years, according to a Swiss RE research.
  • Insurance stocks have so far produced a mixed bag of returns in 2022. SBI Life has increased by over 6.9% whereas HDFC Life has decreased by 10% so far this year.

Insurance regulator

A Swiss RE research that stated India is expected to overtake the United States as the sixth-largest insurance market in the next ten years gave insurance stocks new life on September 2 in an otherwise turbulent market.

After the first hour of trading, SBI Life rose 1.13 percent from lows of Rs 1,292.45 while HDFC Life climbed 1.63 percent from the day's low of Rs 571.25, set at 10:05 am. At 11:00 am, ICICI Pru Life was up 1.35 percent from its low of Rs 590. However, SBI Life and ICICI Pru Life ended the day in the red despite the quick rebound. Star Health Insurance, the newest entrant, had a 3 percent increase in trading.

The strong economic growth and regulatory pressure would help overall insurance premiums in India increase by an average of 14% annually in nominal local currency values over the next ten years, according to a Swiss RE research. India would go up from tenth largest in 2021 to sixth largest in terms of overall premium volume as a result.

The report stated, “Indian life insurance industry will grow at an exceptional rate of 6.6% (in real terms) in 2022 and further grow at 7.1% in 2023.” At the projected growth rate, life insurance premiums in India are set to cross $100 billion for the first time in 2022, it added.

When it comes to non-life insurance space, the growth will slow down slightly in 2022 to 4.5 percent, mainly due to high inflation. “However, the sector is further expected to witness a growth of close to 8% CAGR (in real terms) between 2023 to 2032," said Jérôme Jean Haegeli, Group Chief Economist, Swiss Re.

Insurance stocks have so far produced a mixed bag of returns in 2022. SBI Life has increased by over 6.9% whereas HDFC Life has decreased by 10% so far this year. For the year, ICICI Pru Life has seen a 5% increase.

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