Robust growth, valuations to drive gains for general insurance companies

General insurers have seen robust growth since goods and services tax (GST) reforms. In November, the industry’s gross direct premium income (GDPI) rose 24.1 per cent year-on-year (Y-o-Y) to ₹26,900 crore. Standalone health insurers (Sahi) reported growth at 35.8 per cent Y-o-Y as retail health became GST-exempt and 1/n (spreading the premium over policy period) led to accounting changes. Given improved headline growth, GST support for motor and retail health segments, and moderate valuations, the general insurance space may look attractive. 

Private multi-line insurers outperformed, reporting GDPI growth of 35.5 per cent Y-o-Y while PSU multi-line insurers recorded a marginal decrease of 0.4 per cent Y-o-Y. Growth was driven by strong motor sales and crop insurance. 

Growth among listed players was led by Bajaj General (up 193.1 per cent), Niva Bupa (up 47.1 per cent), Go Digit (up 20 per cent), and Star Health (up 19 per cent). ICICIGI was a moderate performer with 7.4 per cent growth. Even excluding Bajaj General, growth was strong at 15 per cent for private multi-liners.

 

However, in terms of year-to-date (YTD) performance, the 2025-26 (FY26) market share saw PSU multi-line insurers and Sahi gaining 39 basis points (bps) and 70 bps Y-o-Y to 31 per cent and 12.2 per cent, respectively, while private multi-line players lost 160 bps Y-o-Y, dropping to a share of 52.9 per cent. This was because private multi-line insurers saw 4 per cent contraction in October.

 

Growth for Bajaj Allianz General Insurance GDPI jumped 1.9 times Y-o-Y in November and the FY26YTD market share improved 18bps Y-o-Y to 7.9 per cent despite 51 per cent contraction in October. The company has done well in motor and government health business.

 

HDFC Ergo saw 16 per cent growth in premiums in November but FY26YTD contraction stands at 14 per cent. ICICIGI clocked GDPI growth of 7.4 per cent Y-o-Y while facing high competitive intensity in the motor segment, and this is a significant improvement over FY26YTD growth of 2 per cent (including November). The FY26YTD market share decreased 49 bps YoY to 8.6 per cent.

 

Go Digit’s GDPI expanded 20 per cent Y-o-Y and Star Health saw premium growth of 19 per cent Y-o-Y, although they underperformed Sahi peers. Niva Bupa’s GDPI spiked 47.1 per cent Y-o-Y in November.

 

Among PSU multi-liners, New India reported GDPI growth of 11 per cent in November, more or less in line with its strong YTD growth of 13 per cent. PSU multi-line insurers still show growth of 10 per cent in FY26YTD, despite the small contraction in November.

 

Sahis grew at 36 per cent Y-o-Y in November, on top of a sharp 38 per cent Y-o-Y growth in October. Part of this is the accounting change of 1/n with a base from October, but there appears to be genuine demand driven by GST exemption on retail policies. While premium growth may normalise from these levels, the second half of 2025-26 (H2FY26) is likely to be better than H1FY26. Passing the ITC (input tax credit) impact on commissions to distributors (starting October 1) should also protect Sahi profitability. Aditya Birla Health saw 68 per cent Y-o-Y growth in November, over 54 per cent growth in October, and 33 per cent FY26YTD growth.

 

The insurance industry saw both positives and negatives from GST reform, with increased affordability driving growth in retail term and health while ITC changes hit profitability. The demand for new vehicles translated into motor insurance growth. The industry awaits the pending Insurance Amendment Bill, 2025, which may have other impact. Among other factors, the new labour code may lead to higher provident fund (PF) and gratuity contributions, and lower take-home salary and lower discretionary savings.

 

The Insurance Amendment Bill may change the ecosystem. Analysts are considering the possibility of permissions for 100 per cent foreign direct investment (FDI), amendments permitting merger of an insurance unit with a non-insurance company, open architecture for individual agents, and composite licensing.

 

But overall, GST 2.0 has benefited demand for general insurance, even though it’s early to judge if the surge is temporary. Auto and retail health have directly benefited. General insurance stocks have been range-bound over the past 12 months, and this move could be a trigger for re-evaluation.