KUALA LUMPUR, May 29 (Bernama) -- AM Best, a global rating agency and information provider focusing on the insurance industry has maintained negative market segment outlook on India’s non-life insurance market.
This is due to continued reliance on realised and unrealised investment gains to offset technical losses; potential short-term disruption from regulatory enhancements; and persistently competitive and underperforming core business lines of motor and agriculture.
In the new Best’s Market Segment Report, ‘Market Segment Outlook: India Non-Life Insurance’, insurers have been one of the main beneficiaries of the country’s fast-growing economy, and the industry has seen a substantial increase in insurable risks.
Although insurers have strengthened reserves in recent years, concerns on the prudency and potential for tail development remain, given that some claims may get caught up in India’s slow-moving court system.
Unfavourable reserve adjustments have the potential to significantly impact current performance and capital even more so, given the lack of profitability in many other lines, according to a statement.
Despite the negative outlook, AM Best recognised that some non-life insurers still may experience growth. The profitability and capital strength of companies that demonstrate sound risk management practices and disciplined underwriting are likely to improve steadily.
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