“Many insurers are correcting their underwriting based on their experience. Usually during high loss years there is an upward correction in premiums across both direct and reinsurers' side of business. However, insurers are expecting significant losses from certain states due to separate NATCAT (natural catastrophe) events. Everyone is impacted and prices should correct accordingly,” a senior private sector general insurance official said.
According to General Insurance Council data, fire insurance premiums recorded a 28.5 per cent year-on-year (YoY) fall to ₹14,063 crore in the April-July period of FY27. In comparison, the industry clocked 13.4 per cent YoY growth in premiums to ₹27,532.8 crore.
Industry experts said that fire insurance premium rates had been under pressure for nearly a year on account of discounts. During this time, there was no major loss in the segment, due to which insurers did not increase premiums. In addition, the increase in the number of reinsurers participating in the Indian reinsurance market through GIFT City offices, along with the existing state-owned reinsurer, foreign reinsurance branches (FRBs) and newly started domestic reinsurers, has also increased the capacity available in the market, leading to heavy competition and thereby a reduction in the premiums charged by direct insurers.
According to an industry expert, “The general insurance industry is pivoting towards appropriate pricing of premiums in fire insurance. The regulator has also raised concerns about high discounts in premiums and the need for risk-based pricing. The companies, on their part, are trying to avoid unhealthy competition, assess risk and charge premiums based on burn costs without heavy discounting.”
“The industry has not seen any big losses and heavy reinsurance capacity is also available in the Indian market, leading to large discounts. However, any loss during this time may impact the profitability of the general insurers and affect their net retention since most of them are already incurring underwriting losses. The companies are trying to ensure healthy competition through adequate pricing and not allowing certain intermediaries to create a price reduction without analysing the risk,” the expert added.
Globally, too, insurers are witnessing a softening of rates in fire and property lines. According to a recent report by Marsh, global commercial rates declined by 6 per cent in the April-June quarter of FY26 (Q2 2026), compared with 5 per cent in the previous quarter. Property insurance rates declined by 12 per cent in the quarter amid available capacity and high levels of competition. Industry experts said that compared with global markets, Indian markets are better positioned in the soft cycle.
Furthermore, the Insurance Regulatory and Development Authority of India (Irdai) had also warned general insurers against aggressive pricing in the fire insurance segment after receiving complaints of discounts of up to 99 per cent on large industrial risks, saying such pricing threatens insurers' financial health and underwriting discipline.
Most leading general insurers are also facing underwriting losses, and any high claims in the segment could impact their underwriting profitability in the future.
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