Outlook remains positive for private general insurers despite modest growth

Despite modest growth in the non-life insurance sector in July 2025, key segments like motor and fire insurance showed strength, while health faced challenges.

In July 2025, the non-life insurance sector (excluding health) saw collections totalling ₹29,729.8 crore, just 2.4 per cent increase year-on-year (Y-o-Y) compared to 9.3 per cent Y-o-Y rise in July 2024. Growth was 2.8 per cent if health is included.

 

A sizeable proportion of the 2.4 per cent growth was in motor and fire segments, which accounted for over 70 per cent of non-life, excluding health.

 

However, numbers may not always be directly comparable given the transition to 1/n method of calculation for long-term policies which different insurers started applying at different times.

 

The 1/n method reduces the upfront value of premiums booked.

 

Some recovery in the motor segment was offset by the impact of 1/n on health.

 

ICICI Lombard General Insurance Company (ICICIGI) gained market share in retail health.

 

Star Health implemented price hikes across 65 per cent of its retail health portfolio. Niva Bupa raised prices 7 per cent in a flagship health product during the April-June quarter (Q1) of FY26. Claims ratio remained high in the health segment.

 

Health insurance is the largest segment in non-life. Growth is down due to the 1/n rule and affordability issues caused by higher premiums.

 

Standalone health insurers (SAHIs) have outperformed, while public sector health insurers trail private counterparts.

 

The group health segment grew the fastest in YTD FY26, driven by renewals and premium hikes. But growth moderated to 11.4 per cent, down from 19 per cent a year ago.

 

Public sector general insurers sustained faster growth rates in other segments due to fire, engineering, and motor third party (MTP).

 

Specialised insurers recorded 49.2 per cent premium growth in July 2025, (July 2024 growth was 48.3 per cent). SAHIs saw a slowdown with premiums up by 10.4 per cent in July 2025 — less than half the growth rate from a year ago. But SAHIs continue to gain market share.

 

Retail health growth moderated to 9.1 per cent in YTD FY26, with slowdown linked to 1/n method and rising medical inflation, which pushed premiums higher. SAHIs are focussed on retail, whereas general insurers dominate group business. With new SAHIs set to enter, competitive intensity will rise. Other segments, which include government schemes and overseas medical, recorded a 42.5 per cent decline in July 2025, with a high base effect.

 

Motor owner-driven grew 5.2 per cent in YTD FY26 (vs. 13.9 per cent in YTD FY25), and MTP rose 10.1 per cent (vs. 9.9 per cent in YTDFY25).

 

Muted passenger vehicle sales led to slow growth in motor owner driven. The Ministry of Road Transport and Highways (MoRTH) is evaluating an upward revision in MTP premiums, which could support growth while improving profitability.

 

Fire insurance grew by 19.1 per cent YTD FY26, (only 3.2 per cent growth YTD FY25) and engineering grew by 16.8 per cent, up from 4.8 per cent. Crop insurance saw a major decline of 29 per cent, contrasted with 35.6 per cent growth.

 

Some large multi-line players reported contraction. Bajaj Allianz reported a decline of 13 per cent in July 2025 on the back of strong 17.1 per cent growth in June 2025

 

ICICI Lombard saw premiums contract 10.2 per cent for the second straight month (minus 10.4 per cent in June 2025).

 

Weak crop insurance may be a culprit. Go Digit saw strong growth at 27 per cent in July 2025 after 12 per cent growth in June 2025.

 

Amongst SAHIs, Star Health posted 3.3 per cent growth in July (2.9 per cent in June 2025). In Q1FY26, Star’s growth, adjusted for 1/n accounting, was 13.2 per cent. Niva Bupa reported healthy growth of 10 per cent (vs 15.5 per cent in June 2025) while Aditya Birla Health continued its strong growth with 26.5 per cent in June 2025 and 27.3 per cent growth YTD FY26.

 

In the fire segment, Go Digit reported 73 per cent Y-o-Y growth and ICICI Lombard grew 28 per cent. Bajaj Allianz was up 20 per cent.

 

Most analysts remain positive on the sector with several issuing ‘buy’ calls for ICICIGI (one-year target price based on August ratings is ₹2,141.43), Bajaj FinServe (₹2,216), Star Health (₹450) and Medi Assist (₹632.50).