Moody’s projects 7.3% economic growth for India, sees rising demand for insurance
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Moody’s Ratings on Monday projected a positive outlook for the Indian economy, forecasting GDP growth of 7.3% in the current fiscal year. The expected expansion is likely to support average household incomes and boost demand for insurance protection, the global credit rating agency said.
In a detailed report on India’s insurance sector, Moody’s noted that the industry is set to benefit from sustained premium growth driven by economic expansion, rising digitisation, and tax reforms. The agency added that these factors are expected to strengthen the sector’s financial performance and help improve its currently weak profitability.
"We expect India's economy to grow by 7.3% in FY2025 (year to March 2026), up from 6.5% the previous year. This will increase average incomes and support demand for insurance," the report said.
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Income growth lifts insurance demand in India
In FY24–25, India’s per capita Gross Domestic Product (GDP) grew 8.2% to $11,176 while overall GDP rose 6.5%.
Moody’s said that this strong economic growth helped drive a sharp rise in insurance demand. Total insurance premium revenue increased 17% to ₹10.9 lakh crore during the first eight months of 2025–26, from April to November. Health insurance premiums grew 14% while new life insurance business jumped 20%.
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This growth was faster than in 2024–25, when total premiums rose 7%to ₹11.9 lakh crore.
Increased awareness among consumers
According to Moody’s, the rise in premiums also shows that Indian consumers are becoming more aware of risks and are buying more protection. The steady spread of digital platforms has made insurance easier to buy and sell, supporting the regulator’s goal of “Insurance for All” by 2047.
The rating agency added that the government is working to improve the performance of state-owned insurers, which play a major role in the market. It has already sold a minority stake in LIC and plans to inject capital into some public insurers if they improve their underwriting. Other options include merging or privatising some state-owned companies.
Moody’s also said that raising the foreign investment limit in insurance companies to 100%, from 74% earlier, will give insurers more financial flexibility.
(With inputs from PTI)