The Property & Engineering segments grew steadily and registered growth of 11% and 20% respectively, for the year ended March 2023.
Some key trends and developments in the Property & Engineering reinsurance space in India are set out below:
- The Indian insurance market is quite strong and resilient. GIC, FRBs and the CBRs lead the Treaty programs of the Indian insurance companies.?
- Large road and infrastructure project proposals are being worked out pan India. Union Budget 2023-24 has allocated Rs.2.7 lakh crore for road transport and highways. Rail infrastructure is expected to see an investment of Rs.50 lakh crores by 2030. The Indian insurers provide complete insurance support for all types of project risks except for some specialized risks such as ‘wet risks’ etc. which need support from the international markets.
- There is a boom in Metro rail construction across the country. Currently, 22 metro lines are operational or nearing operation. 5 new approved, 21 new proposed and 16 new are being planned. Since 2010, around Rs.20 lakh crore has been invested in the Metro Rail Systems. Union Budget 2023-24 allocated Rs.19,518 crores for metro projects across India. As the metro projects are constructed in a phased manner so the insurance capacity is comfortably provided by the domestic insurers except for some special risks like underground tunneling works etc where support from the international reinsurers is sought.?
- The government is infusing large amounts of capital into Infrastructure projects. Union Budget 2023-24 has allocated Rs.10 lakh crore for infrastructure development projects. This will continue to create huge demand for Project and Property Insurance.
- More customers are nowadays seeking bespoke covers so as to obtain wider cover, improved wordings, lower deductibles, loss limit cover, multi-year cover, etc.?
- Political risks and Sanctions are a growing concern for Indian EPC contractors venturing into overseas territories. International market support is needed for such insurance.
- India is the 3rd largest producer and consumer of electricity worldwide with an installed capacity of 411.64 GW. Union Budget 2023-24 has allocated an investment of Rs.20,600 crore to the Power Sector out of which Rs.7,327 crore has been allocated for the Solar Power Sector. India has 35 Solar Parks and 33 Wind Farms generating 16,078 MW and 125,692 MW of power respectively. India has a target of 500 GW of renewable energy generation by 2030. Renewable energy project insurance is throwing up new challenges and the domestic insurance market is able to support most of these risks in an effective manner except for some specialized risks like floating solar etc where international market support is sought.
- ESG guidelines have significantly restricted the reinsurance capacity for Thermal power plant insurance worldwide. India has 117 Coal, 65 Gas & 19 Diesel power plants generating about 237,269 MW of power with a commanding market share of 56%. Domestic insurers are providing the bulk of the insurance protection for this segment.
- On the Hydropower generation front, 82 Hydropower plants generate about 46,850 MW of power which is roughly 11% of the market power share. Domestic insurers provide the bulk of the insurance protection with some capacity addition from international reinsurers. Large losses globally have made it difficult to easily find reinsurance support.?
- Surety insurance for securing finance for infrastructure projects is eagerly awaited by EPC contractors? and industry as a whole
- Property & Engineering Insurers and Reinsurers are employing a new array of Technology to increase the effectiveness of their Underwriting and Claims Management. This includes Drones, Satellite imagery, Artificial Intelligence and Machine Learning systems to predict future outcomes on projects with the help of data they have collated.
