Moody’s projects 7.3% economic growth for FY26, to fuel insurance demand
Stronger growth, GST relief and reforms seen boosting insurance penetration
Mumbai: Global rating agency Moody’s on Monday projected India’s economy to grow at 7.3 per cent in FY 2025–26 (year ending March 2026), up from 6.5 per cent in the previous year. The agency said the expected expansion would raise average incomes and significantly boost demand for insurance protection across segments.
India’s strong economic momentum has already supported growth in the insurance sector. Total insurance premium revenue rose 17 per cent to ₹10.9 lakh crore ($127 billion) in the first eight months of FY 2025. During this period, health insurance premiums increased 14 per cent, while life insurance new business premiums surged 20 per cent. In FY 2024, overall insurance premiums had grown 7 per cent year-on-year to ₹11.9 lakh crore.
In a report released on Monday, Moody’s said the insurance industry is poised to benefit from sustained premium growth driven by economic expansion, rising digitisation, proposed GST cuts and planned reforms for state-owned insurance companies. The government has announced plans to recapitalise and potentially merge public sector insurers to improve underwriting profitability. According to the agency, stronger underwriting discipline among large state-owned players could support better pricing across the industry.
Despite profitability at the aggregate level, underwriting challenges persist. In FY 2024, the Indian insurance industry reported an after-tax profit of $8.1 billion, but remained loss-making at the underwriting level. Claims rose 6.4 per cent in the life segment and 6.6 per cent in the non-life segment. Moody’s noted that the market dominance of state-owned insurers has so far limited the industry’s ability to pass on compensating price increases.
The agency also highlighted the government’s decision in September 2025 to exempt individual life and health insurance policies from the Goods and Services Tax (GST). This move is expected to make insurance products more affordable, stimulate demand and improve India’s insurance penetration rate, measured as premiums as a percentage of GDP.
