By Admin 
Moody’s on India GDP Growth: Rating agency Moody’s has estimated India’s economic growth rate to be 7.3 percent in the current financial year. The agency believes that strong economic expansion will lead to an increase in average household income, which will have a direct impact on the demand for the insurance sector. According to Moody’s, people will be more aware about insurance due to better income levels and increase in economic activity, which will benefit the insurance industry in the long run.
Moody’s in its report on India’s insurance sector has said that the industry is likely to benefit from continued growth in premium income. This growth will be driven by strong economic expansion, increasing digitalization, changes in the tax system and proposed reforms in government-owned insurance companies. The agency hopes that these factors will also see improvement in the profitability of the insurance industry, which is currently weak.
Economy will grow at the speed of 7.3 percent
According to the agency, India’s economy may grow at a rate of 7.3 percent in the financial year 2025-26, which is higher than the 6.5 percent growth rate of the last financial year. This will increase the average income and strengthen the demand for insurance products. In the financial year 2024-25, per capita GDP increased by 8.2 percent on an annual basis to US $ 11,176, while the total GDP growth was recorded at 6.5 percent.
According to Moody’s data, total insurance premium income in India increased by 17 percent to Rs 10.9 lakh crore during the first eight months (April to November) of financial year 2025-26 due to strong economic growth. During this period, health insurance premiums increased by 14 percent, while premiums related to new life insurance business registered a jump of 20 percent. This growth was much faster than in financial year 2024-25, when total premium income grew by only seven percent to Rs 11.9 lakh crore.
The rating agency said that this increase in premium income reflects the increasing risk awareness among Indian consumers and the rapid digitalization of the economy. Digitization has eased the process of selling and distributing insurance products, making these products more accessible to the common people. This position is in line with the insurance regulator’s goal of “Insurance for All by 2047”.
Demand for insurance companies will increase
Moody’s also said that the government is paying special attention to improving the profitability of public sector insurance companies, because these companies have a huge influence on the market. The government has proposed to sell minority stake in LIC as well as provide capital to some government insurance companies, provided they improve their underwriting capacity. Apart from this, options like merger or privatization of government insurance companies are also being considered.
According to the rating agency, increasing the foreign direct investment (FDI) limit in Indian insurance companies from 74 percent to 100 percent will provide additional financial strength to the sector. This will not only increase capital availability, but will also help in further strengthening the Indian insurance industry by bringing in global expertise and better management practices.
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