Moody’s Pegs India GDP Growth At 7.3% For FY26; Higher Incomes May Boost Insurance Demand

As per PTI news report, India's economy is projected to grow by 7.3% in FY26 as per Moody's Ratings, offering a significant boost to household incomes and stimulating demand for insurance products. This growth is expected to benefit the insurance sector, which is poised for sustained premium growth. 

Economic Expansion and Insurance Sector Growth 

The projected GDP growth of 7.3% in FY26, up from 6.5% in the previous year, is anticipated to increase average household incomes as per Moody's Ratings. This economic expansion is likely to drive demand for insurance, as more individuals seek financial protection. 

In FY25, GDP per capita increased by 8.2% year-on-year to $11,176, while headline GDP grew by 6.5%. This robust growth has already contributed to a 17% rise in total insurance premium revenue, reaching ₹10.9 lakh crore in the first 8 months of FY26. 

Insurance Premium Growth 

Insurance premiums have seen a notable increase, with health premiums up by 14% and life new business premiums climbing by 20%. This marks an acceleration compared to FY25, when premiums rose by 7% to ₹11.9 lakh crore. 

Read More: India’s Growth to Hold at 7% in FY27 Despite External Headwinds: CareEdge Ratings! 

Factors Driving Insurance Demand 

The rise in premium revenue reflects growing risk awareness among Indian consumers and the ongoing digitisation of the economy. Digitisation has facilitated the distribution and sale of insurance products, aligning with the Indian insurance regulator's goal of 'Insurance for All' by 2047. 

Government Initiatives in the Insurance Sector 

The government aims to improve the profitability of state-owned insurers, which play a significant role in the market. Measures include selling a minority stake in Life Insurance Corporation of India (LIC) and recapitalising some state-owned companies to enhance their underwriting performance. 

Additionally, increasing the limit on foreign investment in Indian insurance companies to 100% from 74% is expected to provide these companies with greater financial flexibility. 

Conclusion 

India's projected GDP growth of 7.3% in FY26 is set to enhance household incomes and drive demand for insurance. The insurance sector is expected to benefit from sustained premium growth, supported by economic expansion, digitisation, and government initiatives. 

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