Favourable conditions drive modest rate reductions at India April 1 renewals

By Michael Jones

April 1 - (The Insurer) - An increase in capacity and reinsurer engagement has created favourable conditions that saw single-digit reductions in property cat pricing at India's April 1 reinsurance renewals, Aon said in a report on Tuesday.

• Strong underlying reinsurance demand given scope for primary market growth

• Cyber and surety see increased demand; positive conditions in agriculture

• Collateral requirement for cross-border reinsurers "administratively cumbersome", source says

Increased levels of competition, capacity and engagement were commonplace at April 1 renewals, with the modest reductions in risk-adjusted rates a turnaround on the slight increases seen in 2024 and 2023, the reinsurance broker said.

Strong underlying demand for reinsurance remains given India's growing economy and low insurance penetration rates.

"Most placements are purchasing limits as expiring, although reinsurers are pushing for increased deductibles for catastrophe excess of loss, leading to a slight increase in overall reinsurance capacity," Aon's report said.

While the Indian market has not seen a major catastrophe loss event in 2025, the reinsurance broker said insurers have paid losses for last year's Cyclone Remal alongside flooding events in May, August and September. It said there have also been several large fire losses affecting the power sector, which will likely affect treaty and per-risk negotiations.

Aon said demand has increased for cyber and surety reinsurance solutions. The former has seen insurers require dedicated reinsurance capacity to expand appetite and write standalone cover, while surety has seen government support for insurance products drive reinsurance demand.

India's agriculture insurance market, one of the world's largest behind the U.S. and China, sees state schemes typically purchase multiyear reinsurance cover, which is up for renewal in 2026.

Aon said the sector has produced positive results for the past five years and continues to receive "strong support" from reinsurers. There could be an opportunity for further states to join the government scheme in 2026, which Aon said could create additional potential demand.

Stop-loss agriculture treaties will expect modest reductions at this year's renewals.

REGULATORY ENVIRONMENT

Aon pointed to three regulatory shifts influencing the Indian (re)insurance market: the reintroduction of minimum pricing in property insurance, the relaxation of India's foreign direct investment (FDI) policy and collateral requirements for cross-border reinsurance.

The reinsurance broker said that minimum pricing, which was introduced on January 1, is likely to improve the performance of proportional reinsurance treaties and could signal better ceding commissions.

An expected relaxation of India's FDI policy will see foreign insurers allowed to have 100% of the shareholding, Aon said. The broker said this has resulted in enquiries from reinsurers to better understand India and grow in the market.

India's collateral requirements for cross-border reinsurers came into effect for the 2025 financial year and has seen most cross-border placements opt to hold premiums rather than letters of credit, Aon said.

One senior Asia Pacific reinsurance broking source speaking on the condition of anonymity said the collateral requirements had made it more difficult to operate in India for reinsurers without an onshore presence.

They said the industry is actively engaging with the regulator to make these requirements more user-friendly because they have made the process "administratively cumbersome." The source said India's regulator is considering adjustments.