AM Best has maintained its stable outlook on India’s non-life insurance segment, citing strong growth prospects, favourable investment conditions, and increasing regulatory oversight. 

The rating agency said regulatory initiatives and rising insurance demand continue to support the sector, although underwriting performance remains a key concern.

The non-life market grew 6.2% in total direct premiums to $35.3b for the financial year ending 31 March 2025. 

This was below the 12.8% expansion seen in FY 2024.  

Health insurance and motor insurance—India’s two largest non-life lines—grew 9% and 7.9%, respectively. Health insurance holds a 38.6% market share, whilst motor accounts for 32.2%.

Despite steady premium growth, the segment continues to post underwriting losses due to intense competition, weak pricing discipline in major business lines, and rising claims fraud. AM Best expects these pressures to persist in the near term.

Insurance penetration in India remains low, particularly in rural and underserved areas, where product awareness, agent availability, distribution networks, and consumer trust remain challenges. 

Mis-selling has also been a concern, prompting the Insurance Regulatory and Development Authority of India (IRDAI) to strengthen rules to ensure clearer and more transparent product disclosures.

The regulator is pursuing long-term industry reform under its “Insurance for All by 2047” vision. 

This includes the “Bima Trinity” initiatives: Bima Sugam (a digital insurance marketplace), Bima Vistaar (a bundled protection product), and Bima Vaahak (a women-led distribution channel). Broader regulatory goals include raising insurance penetration, liberalising market operations, and improving distribution efficiency through technology.

Affordability measures are also being introduced. The GST Council removed the 18% GST on individual life and health insurance policies from 22 September 2025, covering term, unit-linked, endowment, family floater, and senior citizen plans.