MUMBAI: After tepid growth in the last financial year, the general insurance industry is expected to grow 13 per cent year-on-year (Y-o-Y) in gross written premium (GWP) in FY26, led more by value than by new policyholder additions, analysts at India Ratings said. The industry’s premium grew 8.5 per cent Y-o-Y in FY25, compared to 12.8 per cent in FY24.
“(In FY26) premium growth led by value would be a larger contributor than new policyholder additions for the sector. This is because rising inflationary pressures, along with hardening of reinsurance rates for certain lines of business, would aid value growth for the sector, whereas affordability, product innovation and reach would drive volume growth,” analysts said in their report.
Growth has varied across standalone health insurers (SAHI), which Ind-Ra expects to grow 21 per cent Y-o-Y in FY26. The share of SAHI in the overall GWP mix of general insurance companies for April–December FY25 increased to 41 per cent due to higher health awareness post-pandemic and rising medical inflation, which has driven demand for health insurance and led to an increase in the sum insured, supporting value growth.
Jinay Gala, director, India Ratings & Research, said, “There have been price revisions taken by many of the players in the health insurance space, and we see there could be an increased amount of porting also taking place because of the pricing getting revised at frequent junctures, impacting policyholders, who would largely look at porting.”
Meanwhile, the growth of public sector insurers continues to lag behind the private sector and is expected to do so on account of capital constraints and lower operational efficiency, which have led to negative operating leverage in underwriting and moderating internal accruals.
Also, the commercial lines, which were relatively muted in FY25, are expected to pick up in FY26, supported by capital expenditure from the government.
In addition, insurance penetration in urban India is noted to be much higher than in rural India and requires deeper distribution, with the right product–market fit for rural consumers and improved affordability. Bundling of multiple products will also be key in addressing the challenge of under-penetration.
“Pricing pressures persist for general insurers due to increasing competition and decreasing consumer affordability, thereby impacting insurers’ underwriting profitability. Ind-Ra believes higher interest rates and capital gains play a crucial role in driving return ratios for the sector, as investment income on the investment book has been cushioning losses on the underwriting side,” Gala said.
Source: Business Standard
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