OECD Global Report: Insurance Profitability Surges in 2024, Highlighting Market Risks
SDG 9: Industry, Innovation, and Infrastructure | SDG 13: Climate Action
Insurance Regulatory and Development Authority of India (IRDAI)
The OECD Global Insurance Market Trends 2025 report covering 67 jurisdictions (including non-OECD countries like India), has found that the global insurance sector’s overall profitability broadly improved in 2024, recovering from consecutive annual declines since 2021. This positive performance was underpinned by easing inflation and strong financial markets.
Life Sector Surge: Gross written premiums in the life sector witnessed strong, widespread growth, averaging 11.9% in nominal terms—nearly double the growth rate recorded in 2023 (6.5%). This was attributed to high interest rates boosting the attractiveness of savings products.
Non-Life Profitability: The non-life (P&C) sector improved its underwriting profitability as premium growth (nominal 8.2%) outpaced claims payments growth (nominal 7.5%). The combined ratio improved in 72% of reporting jurisdictions.
Systemic Risks: The top risks cited by two-thirds of national authorities are Macroeconomic risks (inflation/rate volatility) and Catastrophe or Climate risks, followed closely by Cyber risks.
Asset Allocation: Bonds remain the dominant asset class for insurers, representing over half of total assets.
What is the Combined Ratio? The combined ratio is the aggregate of the loss ratio (claims paid) and the expense ratio (operating costs) in the non-life insurance sector. A combined ratio of less than 100% indicates that the insurer has made an underwriting profit (technical profit) from its core business, a feature observed across almost all jurisdictions in 2024.
India-Specific Relevance
India is categorized as a non-OECD country with moderate penetration, though its data in the Annex tables stops in 2020:
Low Penetration: India’s overall insurance penetration stood at 4.2% of GDP in 2020 (compared to the OECD average of 6.1% that year). The penetration rate for Non-Life insurance was 1.0% in 2020 , and Life insurance was 3.2% in 2020.
Contextual Risk: Given that Catastrophe or Climate Risks were identified as a top vulnerability by two-thirds of the world’s regulators , India’s low non-life penetration (1.0% in 2020) suggests a large structural vulnerability where citizens and assets are significantly under-insured against increasing climate-related disasters.
Policy Relevance
The OECD report provides a critical regulatory warning, emphasizing the necessity of addressing the Catastrophe/Climate Risk vulnerability, which is cited as a top threat globally. Regulators must focus on mandating stronger standards for pricing and reserving for climate risks to ensure that the current surge in profitability does not mask long-term solvency issues arising from increasing frequency and severity of natural disasters.
Follow the full news here: Global Insurance Market Trends 2025