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Time of India
4 days ago
- Business
- Time of India
General insurance industry premium income to grow 8.7% in FY2026, 10.9% in FY2027: ICRA
Growth in the general insurance industry is estimated to pick up in FY2026 after moderating in the previous financial year, with private insurers expected to perform better compared to their public peers. The gross domestic premium income of general insurance companies is estimated to rise to Rs 3.21–3.24 lakh crore in the current financial year, up from Rs 2.97 lakh crore a year ago, according to rating agency ICRA . This translates into a growth of 8.7% in FY2026. The growth for FY2027 is estimated at 10.9%. 'GDPI growth is expected to improve in FY2026, supported by pricing discipline in commercial lines and a low base, continued growth in health, and an increase in vehicle sales vis-à-vis FY2025, partly offset by the impact of 1/n, which is expected to continue in H1 FY2026,' said Neha Parikh, vice president and sector head – financial sector ratings. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like When the Camera Clicked at the Worst Possible Time Read More Also Read: India's health insurance sector faces growth and profitability challenges: Report Parikh added that in the absence of the impact of 1/n, the growth in FY2027 is likely to further improve. Further, private insurers are expected to expand their share of GDPI to 70% by FY2027, up from 68% in FY2025. Live Events In the previous financial year, the industry's GDPI growth moderated to 6.5% YoY from 15.5% because of a slowdown in economic activity and vehicle sales, coupled with the implementation of the 1/n method of accounting, which came into effect on October 1, 2024. Public vs private According to ICRA, private insurers are projected to experience better expansion. However, the growth for public sector insurers is forecast to remain moderate due to their weak capital position. 'The underwriting performance for private insurers is likely to improve, supported by better pricing discipline. Although the combined ratio for PSU insurers is expected to improve, it will remain weak, negatively affecting their net profitability,' it said. In the case of private insurers, the combined ratio worsened in FY2025 due to the higher loss ratio for a few insurers in the motor segment and a higher expense ratio driven by 1/n regulations for long-term policies. Despite this, their profitability improved compared to the previous year due to high realised gains on equity investments. Also Read: Irdai urges insurers to cover India, not just quote stats ICRA estimates a capital requirement of Rs 152–170 billion for the three PSUs (excluding New India Assurance ) by March 2026 to maintain a 1.50x solvency ratio. This assumes 100% forbearance on the Fair Value Change Account (FVCA). 'Solvency for the three PSU insurers (excluding New India) remains weak at negative 0.85 (excluding the fair value change account or FVCA on investments) as of December 2024 in relation to the regulatory requirement of 1.50x, resulting in a sizable capital requirement. Private players, however, remain comfortably capitalised to meet the strong growth,' the rating agency said.
India Gazette
4 days ago
- Business
- India Gazette
General Insurance Industry premium income to grow by 8.7% in FY2026 and 10.9% in FY2027: ICRA
ANI 02 Jun 2025, 13:41 GMT+10 New Delhi [India], June 2 (ANI): The Indian general insurance industry is expected to witness strong growth in the coming years, according to a recent report by Investment Information and Credit Rating Agency (ICRA).ICRA projects the industry's gross direct premium income (GDPI) to grow by 8.7 per cent in FY2026 and 10.9 per cent in FY2027. This growth is attributed to the improvement in economic activity and increased pricing the agency forecasts the general insurance industry's GDPI to increase from an estimated Rs. 2.97 trillion in FY2025 to between Rs. 3.21-3.24 trillion in FY2026, and further to Rs. 3.53-3.61 trillion in FY2027. 'GDPI growth is expected to improve in FY2026 supported by pricing discipline in commercial lines and low base, continued growth in health and increase in vehicle sales vis-a-vis FY2025, partly offset by the impact of 1/n,1 which is expected to continue in H1 FY2026,' said Neha Parikh, Vice President and Sector Head - Financial Sector Ratings, to the forecast, ICRA suggests that private insurers are likely to experience stronger growth, while public sector insurers' growth is expected to be moderate due to their weak capital underwriting performance of private insurers is expected to get better, driven by better pricing discipline. According to Investopedia, Underwriting is the process through which an individual or institution takes on financial risk for a estimates a substantial capital requirement of Rs. 152-170 billion for three PSU general insurers (excluding New India Assurance) to achieve a solvency ratio of 1.5 times by March 2026, assuming full forbearance on the Fair Value Change Account (FVCA), given their weak ICRA projects the return on equity (RoE) for private insurers to improve to 12.6% in FY2026 and 12.8% in FY2027. (ANI)
