Indian Economy News

General insurance industry premium income to grow 8.7% in FY26, 10.9% in FY27: ICRA

India's general insurance sector is poised for accelerated growth in FY26, with private insurers expected to outperform their public counterparts. Rating agency ICRA projects an 8.7% increase in premium income for FY26, reaching Rs. 3.21-3.24 lakh crore (US$ 37.59- 37.94 billion), and a further 10.9% growth in FY27. This growth is driven by improved GDP growth, pricing discipline in commercial lines, continued health insurance expansion, and increased vehicle sales. Private insurers are anticipated to expand their market share to 70% of the Gross Direct Premium Income (GDPI) by FY27, up from 68% in FY25. In contrast, public sector insurers face challenges due to weak capital positions, limiting their growth prospects. The previous financial year saw GDPI growth moderate to 6.5% YoY from 15.5%, impacted by the economic slowdown, reduced vehicle sales, and the implementation of the 1/n accounting method.
Private insurers are expected to see improved underwriting performance supported by better pricing discipline despite a worsened combined ratio in FY25 due to higher motor segment losses and increased expenses from 1/n regulations. Their profitability, however, improved due to high realised gains on equity investments. ICRA estimates a capital requirement of Rs. 15,200- 17,000 crore (US$ 1.78- 1.99 billion) for the three public sector insurers (excluding New India Assurance) by March 2026 to maintain a 1.50x solvency ratio, assuming 100% forbearance on the Fair Value Change Account (FVCA). Solvency for these insurers remains weak at negative 0.85 (excluding FVCA), highlighting the need for substantial capital infusion. Meanwhile, private insurers are well-capitalised to meet the anticipated growth.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.