Indian Insurance Market Experiences A Mix Of Rate Changes Across Different Sectors: Report

For the first time in about seven years, the global insurance market is witnessing a declining trend in commercial insurance rates. According to a recent report by Marsh, an insurance broking and risk management firm, global commercial insurance rates slipped by 2 per cent in the last quarter of 2024. This was followed by a 1 per cent drop in the previous quarter which shows the softening of rates that had been rising for years.

The report, titled ‘Global Insurance Market Index’ states that this decline is being driven by intensified competition in commercial property insurance, a moderation of casualty rate increases, stabilising pricing in financial lines, and accelerated rate reductions for cyber risks.

While regions like the Pacific (-8 per cent), the UK (-5 per cent), Asia (-3 per cent), Europe (-2 per cent), and Canada (-2 per cent) saw a sharp drop, India, along with the Middle East and Africa (IMEA), saw insurance costs rise by 1 per cent.

So why is India bucking the trend?

The global insurance market is under intense competition, which is leading to lower prices in commercial property insurance, financial lines, and cyber insurance. These sectors have benefited from increased insurer capacity and a more stable risk environment.

The global index finds that, in India, while rate trends differ across sectors, the industry is witnessing heightened competition and strategic pricing adjustments by insurers.

Says Omar Gemei, Global Head of Placement, Marsh, India, Middle East & Africa, "The Indian insurance market is witnessing a transformative phase, with property insurance rates for non-catastrophe-exposed portfolios experiencing reductions of up to 40 per cent following a de-tariffing initiative.”

“While casualty insurance rates remain stable, the competitive landscape is prompting insurers to adopt growth strategies. This dynamic environment reflects India's evolving risk landscape and the proactive measures being taken to enhance market resilience,” Gemei states.

Here’s an overview of how insurance rates fared in India;

• Casualty insurance rates remained stable in the country, with non-complex, lower-capacity risks experiencing reductions of 5 per cent to 10 per cent.

• As for the financial and professional lines sector maintained stability, with Directors and Officers (D&O) liability insurance rates decreasing by 5 per cent to 10 per cent.

• In terms of cyber insurance, the Middle East experienced declines of over 37 per cent, India, however, remained stable as insurers have been more cautious.

The report finds that the Indian insurance market is being characterised by competitive dynamics where insurers are implementing growth strategies while navigating a landscape influenced by regional and global factors.