Non-life insurers' premium likely to improve in FY26, say experts

The non-life insurance sector reported single-digit growth in premiums in 2024-25 (FY25) — the lowest in the past three years — due to a slowdown in health and motor segments, as well as changes in premium accounting norms introduced by the insurance regulator. But industry insiders and experts are optimistic about a strong rebound in 2025-26 (FY26), with premium growth expected to rise by 9-13 per cent, driven by an overall improvement in the economy, and revision in motor third party rates.

 

In FY25, premium of non-life insurers rose to ₹3.08 trillion, marking a 6.2 per cent year-on-year (Y-o-Y) increase. This was down from a 13 per cent Y-o-Y growth in FY24, when premiums reached ₹2.89 trillion, and a 16.3 per cent YoY growth in 2022-23 (FY23).

 

"The premium growth for the non-life insurance sector has been impacted in FY2025 amidst economic slowdown and slower vehicle sales, coupled with changes in the accounting norms which has impacted the health and fire segments. The growth has also been impacted by aggressive pricing especially in the fire segment., said Neha Parikh, Vice President and Sector Head – Financial Sector Ratings, ICRA.

 

“Premium growth for FY2026 is likely to improve to 9 per cent supported by the expansion in the health and commercial lines of business. The impact of change in accounting norms is likely to continue in FY2026. Any revision in motor TP pricing could provide an upside to the premium growth. Private insurers are likely to continue to gain market share,” she said.

 

The Insurance Regulatory and Development Authority of India (Irdai) revised the format of reporting premium figures whereby the non-life insurance companies were asked to report long-term premiums on the basis of 1/N where N is the number of days of the policy. 

 

The norms were effective from October 1, 2024. According to experts, this majorly impacted the reporting in health and fire lines of the insurers. According to data, multi-line insurers reported a 5.2 per cent Y-o-Y growth in FY25, reaching ₹2.58 trillion, from 14.24 per cent Y-o-Y in FY24. 

 

Among major multi-line insurers, New India Assurance — the largest non-life insurer — recorded a 4.41 per cent Y-o-Y growth in premiums in FY25, reaching ₹38,629.21 crore. 

 

National Insurance reported a 10.28 per cent Y-o-Y increase to ₹16,666.91 crore, while The Oriental Insurance saw an 8.41 per cent Y-o-Y rise to ₹19,826.27 crore. United India Insurance’s premiums grew by 1.1 per cent Y-o-Y to ₹20,073 crore.

 

On the other hand, among private sector players, ICICI Lombard reported an 8.3 per cent Y-o-Y growth in premiums to ₹26,833.36 crore, while Bajaj Allianz General Insurance saw a 4.61 per cent Y-o-Y increase to ₹21,416.8 crore. 

 

In contrast, HDFC Ergo posted a 14.81 per cent decline in premiums, falling to ₹15,817.28 crore.

 

Standalone health insurers reported 16 per cent Y-o-Y growth to ₹38,413.57 crore in FY25 against a growth of 26.19 per cent in the year-ago period (FY24).

 

“There has been a slowdown in growth of health insurance companies and some other major multi-line insurers. Another challenge is that the commercial lines of business have not grown for the entire year because it is capex (capital expenditure) linked which lagged in FY25. Growth in motor sales has been muted the entire year, which has impacted the growth in motor insurance,” said Jinay Gala, director, India Ratings and Research.

 

However, going forward, analysts believe that the industry will see an improvement in growth supported by an uptick in premiums from commercial lines, motor, and health business.

 

“The growth in FY25 is down compared to the high base in FY24. In FY26, non-life insurance is expected to grow around 13 per cent depending on the way demand pans out for auto in H2FY26 and improvement in capex linked to the repo rate which has been reduced and is likely to aid in growth of commercial insurance,” Gala added.

 

Analysts also noted that any revision in motor third party rates, which have been unrevised for 3 years, could further aid growth in the non-life insurance industry. 

 

The growth of specialised insurers, including ECGC and Agriculture Insurance Company of India, showed a marginal drop to ₹11,106.54 crore from a 29 per cent drop in premiums in FY24.