Gujarat, Tamil Nadu, Maharashtra And Delhi Hotspots For Natural Calamities, Could Boost Insurance, Says Swiss Re Report

Few areas in India with higher concentration of industries and logistical and infrastructural assets are prone to natural calamities, such as floods and earthquakes. These regions of Gujarat, Maharashtra, Tamil Nadu, and Delhi, faced economic losses of around $12 billion in 2023, much higher than the 10-year (2013‒2022) average of $8 billion, according to a January 2025 report by Swiss Re, titled India’s Economy and Insurance Market: Growing Rapidly, but Mind the Risk Hotspots.

India’s Insurance Market Projected To Grow

This risk and other factors, such as inflation, could, however, give a boost to India’s insurance sector.

India’s insurance market is projected to grow at an average rate of 7.3 per cent in premium volumes between 2025 and 2029, and India is expected to become the fastest-growing market among the G20 countries over the next five years, up to 2029. Following Germany and Japan, India is anticipated to be the third-largest economy in the world, driven by economic reforms, private investments, and domestic consumption, the report says.

In addition to these domestic factors, the report also highlights the impact of global growth. It forecasts that the global insurance market will grow by 2.8 per cent in 2025 and approximately 2.7 per cent in 2026, which will support the growth of India’s insurance market, leading to an expected 1.9 per cent share in the global market.

Factors contributing to this growth include a moderation in inflation, improved agricultural output, and a rising demand in rural areas, where about 64 per cent of the Indian population resides.

Additionally, better monsoon conditions in 2024, enhanced road infrastructure, and increased digital connectivity are also driving consumption in these rural regions.

Potential Factors To Affect Insurance Market And Outlook For 2025

Inflation: The report anticipates that the headline consumer price index (CPI) inflation will decrease to 5 per cent in 2024 and further decline to 4.8 per cent in 2025. Consequently, it expects a 25 basis point (0.25 per cent) rate cut this year, considering that inflation hovering around a 4 per cent tolerance level.

Private Investments: There is also expectation that private investment will react depending on the government’s infrastructure- and manufacturing-related spending, and thus medium-term private investment may be rising.

Risks Involved: At the same time, it cautions about the risks to the growth outlook, which includes geo-political tensions, interest rates, and adverse policies by the new US administration.

Life Insurance: According to the report, life insurance premiums are expected to rise more than their historical average. Life insurance contributes 74 per cent of the total premium volumes. It is estimated to grow by 5 per cent in 2025 compared to 4.8 per cent in 2024 and just 0.7 per cent in 2024. Non-life insurance is expected to grow to 7.3 per cent in 2025, up from 5.7 per cent in 2024.

The report indicates that besides health and motor insurance, the biggest improvement came in agricultural insurance as a result of changes in the Pradhan Mantri Fasal Bima Yojana (PMFBY) crop insurance scheme in 2023.

Risks Hotspots: However, it also points out that the areas where industries are clustered, and logistical and infrastructural assets are concentrated are prone to risks. It highlights some regions of Gujarat, Maharashtra, Tamil Nadu, and Delhi, as vulnerable to natural calamities, such as floods and earthquakes, which cost around $12 billion worth of economic losses in 2023. This is higher in comparison to the 10-year (2013‒2022) average of $8 billion.

Final Word

The report suggests that rising disposable income and exposure will aid the insurance sector in India. It highlights that growing awareness will boost insurance demand, which will receive a further push with the evolving insurance regulatory space.

Pointing to the positive outlook and the risks, Mahesh H Puttaiah, head-insurance market analysis, Swiss Re, said: “The rapid pace of India’s economic growth has moved faster than actions taken to reduce the vulnerabilities posed by natural catastrophes. Identification and accurate assessment of risk accumulation in hotspots is crucial to strengthening resilience and the re-insurance industry plays an important role.”

The report projects that profitability in the life insurance business will remain tight. The new business margin may also fall in the first six months for a few insurers because of their changing product mix and inclining toward higher Unit-linked insurance plan (Ulip) volumes. The new surrender value rules will also put pressure on profitability. Non-life insurance is also expected to remain under pressure due to the intense price competition.