Insurance rates for fire, cyber, professional indemnity and directors' liability declined sharply in the June quarter, with cyber insurance rates falling 25-30%, fire insurance down 19%, professional indemnity dropping 20-25%, and directors' and officers' liability decreasing 15-20%, according to data from Marsh India. As reported by The Economic Times, these declines reflect abundant domestic and overseas capacity that undercut pricing across the non-life insurance business and risk distribution sector.
The soft market is expected to persist in the near term, with additional reinsurance capacity through GIFT City adding to competition. According to Marsh India, over two dozen reinsurers have started operating through GIFT City and premium volume has surged 11-fold in 5 years to ₹1.2 billion. As reported by The Economic Times, Gaurav Pagare, sales and placement leader at Marsh India, noted that "it's a buyer's market" with insurance companies prioritizing top-line growth over profitability, leading to aggressive underwriting practices.
The soft market is changing the nature of insurance products, with cyber policies now offering coverage for risks such as ransomware and business interruption that were previously available only from a limited number of insurers. As reported by The Economic Times, the decline is not due to an absence of claims, with Marsh seeing large losses across property, casualty and cyber, but the surge in capacity is outweighing claims pressure. The soft market has also reduced the incentive for corporates to accept higher deductibles, with buyers now using favorable pricing to increase their limits rather than taking discounts for higher deductibles.
While premiums have fallen by around 20-30% in some lines, the increase in limits has been closer to 10%, according to Marsh data. As reported by The Economic Times, clients are using the favorable pricing environment to increase their coverage limits rather than accepting lower premiums. The competitive environment has intensified as companies use lower prices to secure broader coverage and higher limits, reflecting the broader profitability challenges facing the non-life insurance business and risk distribution sector.
