India's general insurers are entering FY26 with a more cautious outlook, shifting their priorities from chasing market share to protecting margins. The trend is particularly visible in regulated segments like motor third-party and crop insurance, where pricing is either fixed or politically sensitive, limiting insurers’ ability to manage risk and cost.
Insurers are instead doubling down on segments that offer greater pricing flexibility and more sustainable margins such as health, personal accident, fire, and engineering.
Retail health, in particular, is seemingly becoming the centrepiece of many insurers’ growth strategies, buoyed by rising medical costs, consumer awareness, and long-term demand tailwinds.
With IRDAI tightening expense norms and pushing for market discipline, insurers may be forced to be more selective in both product design and distribution strategy in the coming quarters. As ICICI Lombard CFO Gopal Balachandran put it, “FY26 may not be about how fast you grow, but how smartly you do.”
Motor segment: Pricing pressure defined the quarter
Growth in the motor insurance business remained patchy, with several insurers scaling back on commercial vehicle and third-party (TP) business due to stagnant regulatory pricing. Others leaned into retail motor, trying to retain momentum through volume.
ICICI Lombard made a deliberate cutback in its commercial vehicle insurance portfolio in Q1, citing “pricing inadequacies” in the TP segment. “Third-party premiums haven’t moved significantly in over four years, and given the rising loss ratios, we believe growing this book aggressively doesn’t make financial sense,” said CFO Gopal Balachandran, during an interaction with Moneycontrol.
Motor TP pricing is governed by the Insurance Regulatory and Development Authority of India (IRDAI), limiting insurers’ ability to price in risk and inflation. After four years of no change since the last revision in 2021, IRDAI has proposed an average 18 percent hike, with some vehicle categories possibly seeing increases of 20-25 percent in FY26, as reported by Moneycontrol earlier. However, the proposed rates are yet to be implemented.
Even ICICI Lombard dialled down on motor, with its overall gross written premium (GWP) growth of 15.4 percent in Q1 aided primarily by retail health and personal accident insurance. “We have consciously de-emphasised the commercial vehicle and property insurance portfolios where pricing adequacy remains a concern,” said Gopal Balachandran, CFO of ICICI Lombard, during the post-earnings call. “In the motor third-party segment, premiums have largely remained unchanged over the last four to five years, making it challenging to grow that book profitably.”
SBI General, which operates with a more balanced product mix, reported 21.5 percent year-on-year growth in overall GWP to Rs 3,250 crore. Motor was among the contributors to this performance, but the company gained around 47 basis points of market share in the segment in the quarter. According to the management during the analyst call, while growth was healthy in private vehicle insurance, the commercial vehicle book faced similar constraints as the broader market.
Shriram General, on the other hand, took a different approach, leaning into its strength in motor. It reported a 31 percent year-on-year rise in total GWP to Rs 960 crore in Q1, driven almost entirely by motor premiums. However, CEO Anil Aggarwal told Moneycontrol that the plan over the next few financial years is to gradually bring down the share of motor in their overall business.
"We would like to bring down the share of motor to around 82 percent from the current 90 percent and boost our non-motor segments from 10 percent to 17-18 percent. This includes health insurance, property and commercial lines like fire," he had said.
Health growth continues but with evolving dynamics
Health remained the most resilient segment for general insurers in Q1, though underlying trends showed early signs of change in policy tenure and distribution preferences.
ICICI Lombard reported a strong 44 percent growth in retail health premiums in Q1, with its group health segment also expanding by 10 percent. Retail health has emerged as one of the largest contributors to the insurer’s GWP. Combined with growth in personal accident insurance, this helped the company report a 29 percent jump in net profit to Rs 747 crore during the quarter. However, loss ratios in health rose, pushing up the overall combined ratio to 102.9 percent from 102.4 percent last year. The loss ratio is a key measure of an insurer’s claims experience, calculated as the percentage of premium income paid out as claims. Higher ratios indicate rising payouts and potential pressure on profitability.
“Retail health continues to be a strong growth driver for us, and we’ve seen consistent traction across geographies,” said Gopal Balachandran, CFO of ICICI Lombard. “While we did see an uptick in health claims, particularly from the north and west zones, we view this as manageable within our broader underwriting framework.”
SBI General too reported strong momentum in health, gaining 72 basis points of market share in the segment. The company’s diversified model helped absorb rising costs, with its loss ratio improving to 81.7 percent from 86.2 percent a year earlier. Health, along with fire and personal accident, formed the bulk of incremental premium flows for the insurer in Q1.
Standalone health insurer Niva Bupa also saw continued traction in its core business, but flagged a sharp shift in product preference. CEO Krishnan Ramachandran told Moneycontrol that new IRDAI commission norms had triggered a rise in one-year policies, as distributors increasingly moved away from multi-year plans. “The 1/n rule has impacted how long-term commissions are paid, which is affecting distributor behaviour,” he said.
Under this rule, insurers must spread out commission expenses evenly over the policy term. For example, over three years for a three-year policy, rather than booking the full cost upfront. This reduces immediate earnings for distributors, making one-year policies more attractive from a payout perspective.
Fire revival underway after price discipline
After a weak FY25, fire and engineering insurance showed signs of a turnaround in Q1 FY26, supported by improved pricing.
A Motilal Oswal report suggested that the fire segment grew around 17 percent year-on-year during the quarter, with engineering insurance expanding over 20 percent.
For ICICI Lombard, fire remained a focus area, though the company said it scaled down portions of its property insurance portfolio that lacked pricing adequacy.
SBI General reported gains of 47 basis points in fire insurance market share, driven by improved underwriting margins and disciplined pricing.
Shriram General, meanwhile, stayed away from fire and other commercial lines, maintaining a conservative approach. While the company did participate in crop insurance tenders, it opted out after failing to secure pricing it deemed viable. “We are not in a hurry to burn our fingers,” CEO Aggarwal told Moneycontrol, referring to the pricing and claim volatility typically associated with government-backed schemes.
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