Life insurers may see muted NBP growth, non-life and reinsurers to ride on health, motor premium during Q1FY26

Insurance Q1 FY25 Outlook

India’s insurance sector is expected to deliver a mixed performance in the first quarter of FY26, with life insurers likely to post moderate growth amid slowing momentum in new business premiums, while general insurers and reinsurers are set to benefit from firmer pricing, improved underwriting discipline, and sustained demand in health and motor segments, according to analysts from multiple brokerage firms.

As per reports by Motilal Oswal, HDFC Securities and Deven Choksey Research, the overall premium collections are expected to remain healthy, driven largely by renewals and increased adoption of guaranteed and protection products.

In contrast, non-life insurers are expected to see a stronger quarter, aided by better pricing power and normalising claims ratios, while reinsurers stand to gain from hardening global rates and a benign catastrophe environment, analysts said.

Life Insurers

While Gross Written Premium (GWP) for life insurers is projected to grow 18.7 percent year-on-year in Q1FY26, driven primarily by renewals, momentum in New Business Premiums (NBP) is expected to be more subdued compared to the previous year, according to Deven Choksey Research.

In April 2025, NBP rose by 8.4 percent year-on-year to Rs 21,965.7 crore, down sharply from 22 percent growth in April 2024.

Similarly, Annualised Premium Equivalent (APE), a measure of new business volume, increased by just 4.4 percent in April to Rs 7,719 crore.

However, analysts expect growth to have picked up in May and June, and estimate APE to rise by 16.9 percent for the full quarter, aided by stronger traction across bancassurance and agency distribution channels.

In May 2025, the life insurance industry recorded NBP of Rs 30,463 crore, reflecting a 13 percent year-on-year increase, up from Rs 27,034 crore in May 2024.

The APE for the month stood at approximately Rs 11,029 crore, marking a 14.4 percent rise.

Combined April–May figures show NBP at Rs 52,427 crore, a 10.8 percent increase over the same period last fiscal.

Data for June 2025 is yet to be released.

The Value of New Business (VNB), a measure of profitability from new policies sold, is projected to grow 13.1 percent year-on-year, with margins expected to expand by 42 basis points to 25.7 percent.

Analysts at Deven Choksey said the slowdown in early-quarter growth may be cushioned in the coming months by rising demand for non-participating (non-par) guaranteed products, which are appealing to risk-averse consumers seeking stable returns.

Among individual players, HDFC Life is expected to report a 23 percent rise in GWP, with APE growth estimated at 18.9 percent. Its VNB margins are projected to remain healthy at 25.5 percent.

SBI Life is likely to post a 16.9 percent increase in GWP, alongside a 14 percent rise in VNB and APE growth of approximately 15.7 percent.

Meanwhile, ICICI Prudential Life is expected to see its GWP expand modestly, with APE anticipated to grow in mid-single digits. The company’s VNB margins are projected to improve by 50 basis points year-on-year to 24.5 percent, indicating better product mix.

Non-life Insurers

Non-life insurers are expected to post a stronger set of numbers for Q1 FY26. Premium growth in the segment is projected to be in the range of 8-12 percent on-year, with the motor and health portfolios contributing significantly, according to HDFC Securities.

The uptick in passenger vehicle and commercial vehicle sales is fuelling demand for motor policies, while the health segment continues to expand through both retail and group products.

Underwriting performance is also expected to improve this quarter, with better pricing discipline in group health and motor lines. Analysts predict that claims ratios, which were elevated last year due to post-pandemic deferred treatments and vehicle repairs, will normalise, especially for private insurers.

The combination of higher premiums, a stable claims environment, and improved operational efficiency through technology is expected to support margin expansion for leading players in the non-life space. Continued innovation in OPD-linked and hybrid products is also expected to enhance profitability, the HDFC Securities report added.

Among individual players, ICICI Lombard General Insurance is expected to deliver 8–11 percent growth in gross direct premiums (GDPI) year-on-year for Q1FY26, according to a Motilal Oswal note. The company ended FY25 with Rs 26,833 crore in GDPI, with motor insurance contributing Rs 10,740 crore and health insurance Rs 7,673 crore. Its combined ratio is likely to improve to about 101–102 percent, reflecting stronger underwriting discipline.

Bajaj Allianz General Insurance is projected to lead industry growth with approximately 15-20 percent year-on-year premium expansion in Q1FY26. A year ago, during Q1FY25, Bajaj Allianz grew 24.5 percent to Rs 4,716 crore in GDPI. Continued strength in motor and health portfolios, alongside digital expansion, is expected to support this trend.

Star Health & Allied Insurance is forecast to achieve 12-16 percent premium growth in Q1FY26. The company reported an 18 percent year-on-year growth in gross written premiums during Q1 FY25, reaching Rs 3,476 crore.

Renewal premium hikes and increased retail penetration are likely to support its performance this quarter.

According to industry data, gross direct premium income (GDPI) in the non-life insurance segment for April-May 2025 rose over 10 percent year-on-year, reflecting a broad-based recovery in both retail and group lines.

In May 2025 alone, GDPI grew by 6.5 percent to Rs 22,257 crore, compared to Rs 20,905 crore in May 2024.

Reinsurers

Reinsurance companies, led by GIC Re, are expected to benefit from a favourable global pricing cycle and relatively lower catastrophe losses in Q1 FY26, according to a report by HDFC Securities.

The report highlighted that improved pricing across property and casualty segments, particularly in retrocession and facultative reinsurance, is likely to support top-line growth.

Retrocession, which involves reinsuring reinsurance risk, has seen firmer rates globally as companies look to limit exposure to high-severity events. Facultative business, where underwriters assess risks on a case-by-case basis outside of treaty contracts, is also witnessing better pricing power amid tighter capacity and heightened risk awareness.

This hardening of rates, analysts at HDFC Securities said, is being driven by rising climate-linked risks, global underwriting caution, and higher reinsurance demand from primary insurers.

Domestically, GIC Re’s performance will also hinge on the health of underlying business in motor and health insurance, given its dominant market share in those segments.

Margin expansion is expected to be supported by stricter underwriting and better investment returns, aided by a higher interest rate environment, the report added.