Non-life insurance outlook holds as India cuts GST to 0%

Individual life and health cover have become more affordable after the tax rate fell from 18%.

India’s non-life insurance market will likely improve its growth momentum in the near term as insurance demand strengthens and financial inclusion measures take effect, AM Best said.

Chris Lim, associate director of analytics at AM Best, said India’s long-term economic prospects remain supportive of non-life insurance growth. 

He added that recent changes to the goods and services tax, which reduced the rate on individual life and health insurance policies to 0% from 18%, are expected to improve affordability, particularly for health insurance, and support demand.

AM Best has also kept its outlook on India’s non-life insurance sector at stable, pointing to supportive economic conditions and steady demand, helped by regulatory reforms.

In its Market Segment Outlook: India Non-Life Insurance, AM Best said the sector recorded mid-single-digit premium growth in the fiscal year ended 31 March 2025. 

This was slower than the previous year due to pricing pressure in the fire insurance segment and weaker growth in motor insurance. 

Changes in accounting treatment for long-term policies also reduced reported growth during the year.

The report highlighted the passage of the Sabka Bima Sabki Raksha Bill in 2025, which raised the foreign direct investment limit in insurance companies to 100% from 74%. 

AM Best said this change is likely to attract more capital into the sector, improve financial flexibility and support insurers’ solvency positions. 

Victoria Ohorodnyk, director of analytics at AM Best, noted that higher foreign participation could increase competition in the short term but may also drive efficiency and innovation over time.

AM Best also said investment yields for Indian non-life insurers are expected to remain broadly stable. 

Interest rates and resilient domestic equity markets are likely to support returns, although high equity exposure increases sensitivity to market volatility.