Swiss Re has forecast that total insurance premiums in India will grow by 7.1 per cent in real terms, well above the global (2.4 per cent ), emerging market (5.1 per cent ) and advanced market (1.7 per cent ) over the next five years (2024-28)
Natural catastrophes in India have led to uninsured economic losses of $32.94 billion (Rs 273,500 crore) during the five period of 2018-22, indicating the low insurance penetration in the country, global insurance giant Swiss Re said. Insured economic losses during the period were just $1.10 billion (Rs 9,130 crore) as 93 per cent of exposures were uninsured, it said.
Alongside the expanding economy and growing insurance market, India is exposed to many natural catastrophes, including earthquakes, floods, tropical cyclones, drought and wildfires.“However, insurance protection against natural catastrophe risks is low: our resilience analysis indicates that 93% of the exposures are uninsured,” Swiss Re said in a report.
In 2014, uninsured economic losses were a whopping $ 15.18 billion (Rs 126,000 crore) — biggest ever loss — while insured losses were just $ 1.29 billion. The total uninsured economic losses since 2014 amounted to $74.83 billion (Rs 621,000 crore) whereas insured losses were just $5.41 billion (Rs 44,900 crore).
“Economic losses due to natural disasters have been on an upward trend for many years, driven mainly by economic growth and rapid urbanisation,” it said. India’s major cities have high population- and asset-value concentrations, and many are exposed to multiple natural hazards.
Mahesh H Puttaiah, Head Group Economic and Sigma Research, Swiss Re Institute, said, “ India has also made good progress on risk mitigation measures for tropical cyclones, such as setting up early warning systems. But there is a long way to go on this front for other hazards (for example, floods).”
One challenge in bridging the large protection gap is limited awareness and perception of the risks. “The industry also faces challenges in underwriting, with a need for more granular data on existing natural catastrophe exposures, and establishing more robust modelling capabilities,” Swiss Re said.
The insurance industry has solutions to help individuals and companies to manage financial losses that result from natural catastrophes, while at the state level, reinsurance solutions can support governments in relief and rehabilitation work, in reinstating crucial services and in the rebuilding of public infrastructure, Puttaiah said.
Swiss Re has forecast that total insurance premiums in India will grow by 7.1 per cent in real terms, well above the global (2.4 per cent ), emerging market (5.1 per cent ) and advanced market (1.7 per cent ) over the next five years (2024-28).“At this rate, India will have the fastest growing insurance sector of the G20 countries,” it said.
“In 2023 alone, premium growth moderated slightly from the previous year, reflecting still-in-process adjustments to the post Covid-19 era,” Swiss Re said. Life premium growth slowed to an estimated 4.1 per cent from 5.9 per cent in 2022 as memories (risk awareness) of the pandemic faded, and a recent change in tax norms for high-ticket policies weighed on new premium growth, it said.
“We expect robust growth in life business (premiums up 6.7 per cent in 2024-28), supported by rising demand for term life cover by the middle-class and the country’s young population, and also increasing industry adoption of Insurtech,” Swiss Re said.
Swiss Re said non-life premium growth moderated slightly from 9.0 per cent in 2022 to an estimated 7.7 per cent in 2023, as the market continued to stabilise after the pandemic. “Macro dynamics such as high interest rates, and elevated retail and medical inflation also presented some headwinds to non-life sector growth,” it said.
Non-life premiums are forecast to grow by an annual average of 8.3 per cent during 2024-28, driven by economic growth, improvement in distribution channels, government support and a favourable regulatory environment.
Courtesy : https://indianexpress.com/article/business/uninsured-losses-of-32-94-billion-in-india-due-to-natural-disasters-in-five-years-swiss-re-9113197/