Pandemic worsening Indian non-life insurers' headwinds

Short-term operating pitfalls will affect earnings and capital positions.

The ongoing pandemic will worsen the pressure already being faced by Indian non-life insurers particularly on underwriting and investments, according to an AM Best report.

Other factors such as a competitive market, persistently poor pricing discipline and reliance on investment activities for profitability support AM Best’s position. Market dynamics also include heightened economic uncertainty and pandemic implications, which are expected to weigh further on the sector.

The general short-term operating environment will present pitfalls on earnings and capital positions despite the diversity of the segment, the report said.

On the other hand, government and regulatory efforts to increase insurance penetration and accessibility through new products and schemes could counteract the negative outlook. 

In addition, regulatory and market advancements will continue to drive investment in digital infrastructure, which will likely support online sales, operations and risk management.