India's FY26 GDP Growth Of 7.3% To Buoy Insurance Demand: Moody's

Moody's Ratings on Monday, January 19, forecasted that India will record 7.3% growth in FY26, while signalling that strong economic expansion will buoy average household incomes.

On similar lines, a SBI report projected India to "touch $4000 per capita in another 4 years in 2030 to transition to an Upper Middle Income country and join China and Indonesia at current classification."

"We expect India's economy to grow by 7.3 per cent in FY 2025 (year to March 2026), up from 6.5 per cent the previous year. This will increase average incomes and support demand for insurance," Moody's said.

The New York headquartered ratings agency noted that the south Asian nation's insurance sector is poised to benefit from increased digitisation, robust economic expansion, tax changes and a planned reform of the dominant state owned insurance sector.

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However, a Emkay Brokerage noted, "In spite of the sector having opened up to private participation for >25 years, distribution and operational costs of the Insurance business have not improved in the manner the regulator had hoped. Against such a backdrop, the concerted statements of various regulators and
governments indicate the seriousness of the issue.

Meanwhile, Moody's said India's robust economic growth contributed to a 17 per cent increase in total insurance premium revenue to ₹10.9 lakh crore in the first eight months (April-November) of 2025-26, with health premiums up 14 per cent and life new business premiums climbing 20 per cent.

The surge in premium revenue also indicates domestic consumers' rising risk awareness and the steady digitisation of the India's economy, it said.

Further, it noted that the centre aims to improve the profitability of the country's state-owned insurers, which exert a significant influence over its insurance market.

It has sold a minority stake in Life Insurance Corporation of India (LIC) and has proposed to recapitalise some state-owned companies, provided they improve their underwriting performance. Other proposed measures include the potential merger or privatisation of state-owned insurers.

Moody's also said that an increase in the limit on foreign investment in Indian insurance companies to 100 per cent of capital from 74 per cent should give them additional financial flexibility.