Mumbai: Global credit rating agency, AM Best has maintained its outlook on India's non-life insurance segment at stable, citing supportive macroeconomic conditions and sustained insurance demand driven by regulatory initiatives and reforms.

According to BERNAMA News Agency, the Best's Market Segment Report indicates that India's non-life segment recorded mid-single-digit premium growth for the financial year ended March 31, 2025 (FY2025). The growth was moderated compared to the previous year due to pricing pressure in the fire insurance segment and slower business expansion in motor insurance. Additionally, changes in accounting treatment for long-term policies during the year affected reported growth.

Despite these challenges, momentum is expected to improve over the near term as insurance demand strengthens and regulatory financial inclusion initiatives gain traction, AM Best stated in a report. AM Best associate director, analytics, Chris Lim, commented that India's long-term economic outlook remains favorable for non-life insurance growth, despite the near-term moderation.

'Recent reform to the goods and services tax directly supports insurance demand by reducing the rate on individual life and health insurance policies to zero per cent from 18 per cent. Improved affordability, particularly for health insurance policies, is expected to bolster individual health insurance demand meaningfully,' said Lim.

A key provision in the recently passed Sabka Bima Sabki Raksha Bill (Amendment of Insurance Laws), 2025, increases the foreign direct investment limit in insurance companies. This move is expected to attract additional capital, enhance financial flexibility, and bolster the segment's solvency.

AM Best also noted that investment yields for Indian non-life insurers are expected to remain broadly stable, supported by steady interest rates and resilient domestic equity markets. However, elevated equity exposure could increase sensitivity to market volatility over the medium term.