India’s FY26 GDP growth of 7.3% to boost average household income, insurance demand: Moody’s

New Delhi, Moody's Ratings on Monday projected India to clock a 7.3 per cent growth in the current fiscal, and said the strong economic expansion would support average household incomes and stimulate demand for insurance protection.

In its report on India's insurance sector, Moody's said the industry looks set to benefit from sustained premium growth on the back of robust economic expansion, increased digitisation, tax changes and a planned reform of the dominant state owned insurance sector. The increase should improve the industry's currently weak profitability.

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"We expect India's economy to grow by 7.3 per cent in FY 2025 (year to March 2026), up from 6.5 per cent the previous year. This will increase average incomes and support demand for insurance," it said.

In FY 2024-25, GDP per capita rose 8.2 per cent year-on-year to USD 11,176, while headline GDP grew by 6.5 per cent.

Moody's said India's robust economic growth contributed to a 17 per cent increase in total insurance premium revenue to Rs 10.9 lakh crore in the first eight months (April-November) of 2025-26, with health premiums up 14 per cent and life new business premiums climbing 20 per cent.

This marked an acceleration relative to 2024-25, when premiums rose 7 per cent to Rs 11.9 lakh crore.

Moody's said the increase in premium revenue also reflects Indian consumers' growing risk awareness and the steady digitisation of the country's economy.

Digitisation facilitates the distribution and sale of insurance products, making them more accessible, in line with the Indian insurance regulator's objective of 'Insurance for All' by 2047.

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It said the government aims to improve the profitability of the country's state-owned insurers, which exert a significant influence over its insurance market. It has sold a minority stake in Life Insurance Corporation of India (LIC) and has proposed to recapitalise some state-owned companies, provided they improve their underwriting performance. Other proposed measures include the potential merger or privatisation of state-owned insurers.

Moody's also said that an increase in the limit on foreign investment in Indian insurance companies to 100 per cent of capital from 74 per cent should give them additional financial flexibility.