Foreign reinsurers to surpass 50% market share in India by 2025: GlobalData

As licensed foreign reinsurers continue to expand their market presence in India, their market share, in terms of gross written premiums (GWP), is estimated to surpass 50% in 2025, according to GlobalData.

Foreign reinsurers have nearly doubled their market share in a short period, increasing from 25.8% in 2019 to 49% in 2023 (financial year ending March 2024).

GlobalData’s Insurance Database reveals a concentrated reinsurance market in India, with the top five reinsurers – four foreign reinsurers and one domestic reinsurer – accounting for 95.4% of the GWP in 2023.

Notably, the market share of the top four foreign reinsurers increased from 19.4% in 2019 to 44.4% in 2023.

Several factors are contributing to this expansion. A supportive regulatory environment, coupled with competitive pricing, flexible terms compared to the General Insurance Corporation of India (GIC Re), has made foreign reinsurers increasingly attractive.

Furthermore, India’s growing economy, and increasing insurance penetration provide a great environment for continued growth. All the top four foreign reinsurers’ GWP registered double-digit CAGR during 2019-23.

Although GIC Re retained its leading position in 2023, its market share has declined significantly from 74.2% in 2019 to 51% in 2023. Foreign reinsurers such as Munich Re and Swiss Re continued to increase their market share and emerge as a threat to GIC Re.

Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, comments: “Reduction in obligatory cession rate, losses from agriculture reinsurance, and decline in non-obligatory business have reduced the market share of GIC Re.

“Additionally, the IRDAI (Re-insurance) Regulations, 2018 allowed foreign reinsurers to establish branch offices and write local reinsurance business. The competition will further intensify with the entry of new reinsurers into the market, such as Valueattics Reinsurance in 2025.”

In 2023, obligatory business constituted 39% of GIC Re’s earnings, with the remaining 61% from non-obligatory business. Although GIC Re benefits from obligatory cession and first right of refusal, this is likely to cease as insurers, now financially robust with sufficient underwriting capacity, are resisting it due to unfavourable commission rates.

Additionally, the government is planning to sell up to a 10% stake in GIC Re as a part of the SEBI guideline, GlobalData noted. This makes it mandatory for listed firms to maintain a minimum public shareholding of 25%, which is expected to further impact the company’s market share in 2025.

Sahoo added: “General insurers in India mostly cede property, motor, and personal accident and health (PA&H) business, which accounted for 84.6% of the total reinsurance in 2023, in terms of reinsurance ceded premiums. The growth of foreign reinsurers’ business during 2020-23 was primarily supported by property and motor insurance, which together accounted for 70.8% of the total business for the top four foreign reinsurers in 2023. The four foreign reinsurers accounted for 50% of the overall Indian motor reinsurance ceded business in 2023 and 26% of the overall property reinsurance ceded business.”

Reinsurance business is expanding due to increasing losses in several insurance lines. In 2023, agriculture insurance experienced the highest loss ratio at 95.6%, followed by property insurance at 83.6%, PA&H at 87.5%, and motor insurance at 80.6%. These elevated loss ratios are a key factor propelling the growth of the reinsurance sector.

According to GlobalData’s forecast, the reinsurance market in India will grow at a CAGR of 7.3% to reach INR832.8 billion ($9.7 billion) in 2029.

As a result, India could become one of the attractive destinations for reinsurers in the coming years on top of experiencing economic growth. Additionally, the IRDAI has also been working to expand the domestic reinsurance market, analysts noted.

Sahoo concluded: “Foreign reinsurers will continue to increase their market share in the soft reinsurance market as treaty renewal rates largely remain stagnant. Despite natural catastrophe risks, the competition among reinsurers will keep the rate from hardening.

“The initiative from IRDAI to increase insurance penetration under its ‘Insuring India by 2047’ will also support the growth of the reinsurance market during 2025-29. The market is expected to welcome more reinsurers in the coming years, which will increase competition and reduce the market share of GIC Re further.”

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