India's reinsurance market to reach US$7.8bn by 2024
India’s pure reinsurance business is among the fastest-growing markets globally. The recent regulatory changes by the Insurance Regulatory and Development Authority of India (IRDAI) are set to encourage the offshore companies to set up reinsurance operations in India. These amendments will not only bring a level playing field for all the competitors but also drive growth of India’s reinsurance market to reach INR579.4bn (US$7.8bn) in 2024, says GlobalData, a leading data and analytics company.
The Indian reinsurance industry has seen sharp rise during the last three years. The reinsurance premium in India grew from INR234.9bn (US$3.5bn) in 2016 to INR429.7bn (US$6.2bn) in 2019, at a compound annual growth rate (CAGR) of 22.3%. This has coincided with the amendments in the market entry norms by IRDAI in 2015, allowing foreign reinsurers to set up branch offices. Till then, General Insurance Corporation of India (GIC Re) had monopoly in reinsurance market.
Shabbir Ansari, Insurance Analyst at GlobalData, comments: “Regulatory amendments were introduced in 2018 to increase competition by allowing foreign reinsurer branches (FRBs) to bid for contracts. Till then foreign reinsurers could only bid in case it was rejected by GIC Re.”
GIC Re, the tenth largest reinsurer globally, is facing decline in its home market. While it still has the first right of refusal for all reinsurance contracts, by matching FRBs quote, there are expectations that this will also be removed.
Ansari concludes: “Further capital requirements were lowered from INR50bn to 10bn. All these changes helped offshore reinsurer increase their market share from 0.2% in 2016 to 24% in 2019.”