Growth in the general insurance industry is estimated to pick up in FY2026 after moderating in the previous financial year, with private insurers expected to perform better compared to their public peers.The gross domestic premium income of general insurance companies is estimated to rise to Rs 3.21–3.24 lakh crore in the current financial year, up from Rs 2.97 lakh crore a year ago, according to rating agency ICRA. This translates into a growth of 8.7% in FY2026. The growth for FY2027 is estimated at 10.9%.“GDPI growth is expected to improve in FY2026, supported by pricing discipline in commercial lines and a low base, continued growth in health, and an increase in vehicle sales vis-à-vis FY2025, partly offset by the impact of 1/n, which is expected to continue in H1 FY2026,” said Neha Parikh, vice president and sector head – financial sector ratings.Also Read: India’s health insurance sector faces growth and profitability challenges: ReportParikh added that in the absence of the impact of 1/n, the growth in FY2027 is likely to further improve. Further, private insurers are expected to expand their share of GDPI to 70% by FY2027, up from 68% in FY2025.In the previous financial year, the industry’s GDPI growth moderated to 6.5% YoY from 15.5% because of a slowdown in economic activity and vehicle sales, coupled with the implementation of the 1/n method of accounting, which came into effect on October 1, 2024.Public vs privateAccording to ICRA, private insurers are projected to experience better expansion. However, the growth for public sector insurers is forecast to remain moderate due to their weak capital position.“The underwriting performance for private insurers is likely to improve, supported by better pricing discipline. Although the combined ratio for PSU insurers is expected to improve, it will remain weak, negatively affecting their net profitability,” it said.In the case of private insurers, the combined ratio worsened in FY2025 due to the higher loss ratio for a few insurers in the motor segment and a higher expense ratio driven by 1/n regulations for long-term policies. Despite this, their profitability improved compared to the previous year due to high realised gains on equity investments.Also Read: Irdai urges insurers to cover India, not just quote statsICRA estimates a capital requirement of Rs 152–170 billion for the three PSUs (excluding New India Assurance) by March 2026 to maintain a 1.50x solvency ratio. This assumes 100% forbearance on the Fair Value Change Account (FVCA).“Solvency for the three PSU insurers (excluding New India) remains weak at negative 0.85 (excluding the fair value change account or FVCA on investments) as of December 2024 in relation to the regulatory requirement of 1.50x, resulting in a sizable capital requirement. Private players, however, remain comfortably capitalised to meet the strong growth,” the rating agency said.
Growth in the general insurance industry is estimated to pick up in FY2026 after moderating in the previous financial year, with private insurers expected to perform better compared to their public peers.The gross domestic premium income of general insurance companies is estimated to rise to Rs 3.21–3.24 lakh crore in the current financial year, up from Rs 2.97 lakh crore a year ago, according to rating agency ICRA. This translates into a growth of 8.7% in FY2026. The growth for FY2027 is estimated at 10.9%.“GDPI growth is expected to improve in FY2026, supported by pricing discipline in commercial lines and a low base, continued growth in health, and an increase in vehicle sales vis-à-vis FY2025, partly offset by the impact of 1/n, which is expected to continue in H1 FY2026,” said Neha Parikh, vice president and sector head – financial sector ratings.Also Read: India’s health insurance sector faces growth and profitability challenges: ReportParikh added that in the absence of the impact of 1/n, the growth in FY2027 is likely to further improve. Further, private insurers are expected to expand their share of GDPI to 70% by FY2027, up from 68% in FY2025.In the previous financial year, the industry’s GDPI growth moderated to 6.5% YoY from 15.5% because of a slowdown in economic activity and vehicle sales, coupled with the implementation of the 1/n method of accounting, which came into effect on October 1, 2024.Public vs privateAccording to ICRA, private insurers are projected to experience better expansion. However, the growth for public sector insurers is forecast to remain moderate due to their weak capital position.“The underwriting performance for private insurers is likely to improve, supported by better pricing discipline. Although the combined ratio for PSU insurers is expected to improve, it will remain weak, negatively affecting their net profitability,” it said.In the case of private insurers, the combined ratio worsened in FY2025 due to the higher loss ratio for a few insurers in the motor segment and a higher expense ratio driven by 1/n regulations for long-term policies. Despite this, their profitability improved compared to the previous year due to high realised gains on equity investments.Also Read: Irdai urges insurers to cover India, not just quote statsICRA estimates a capital requirement of Rs 152–170 billion for the three PSUs (excluding New India Assurance) by March 2026 to maintain a 1.50x solvency ratio. This assumes 100% forbearance on the Fair Value Change Account (FVCA).“Solvency for the three PSU insurers (excluding New India) remains weak at negative 0.85 (excluding the fair value change account or FVCA on investments) as of December 2024 in relation to the regulatory requirement of 1.50x, resulting in a sizable capital requirement. Private players, however, remain comfortably capitalised to meet the strong growth,” the rating agency said. Economic Times
