Health loss ratios up between 200-300 bps for general insurers in Q1FY26 amid claims spike

Health loss ratios up between 200-300 bps for general insurers in Q1FY26 amid claims spike

India’s general insurance industry entered FY26 grappling with claims pressure, as health loss ratios for leading players rose between 200 and 300 basis points year-on-year during Q1 FY26.

ICICI Lombard, Star Health, Niva Bupa, and New India Assurance were among the insurers that reported a deterioration in claims metrics.

While the health segment continues to be the key growth engine for general insurers, both in terms of premium volumes and new customer acquisition, Q1 FY25 numbers indicate that it is becoming the biggest pressure point on profitability.

Insurers cited above have attributed this trend to a combination of longer hospital stays, wider utilisation of health plans, and rising treatment costs, especially post-COVID, as key reasons for the rising claims.

ICICI Lombard saw its retail health loss ratio rise to 74.3 percent in Q1 FY26, up from 72.5 percent a year ago. Group health reported growth in volumes but showed early signs of strain. CFO Gopal Balachandran told Moneycontrol that the spike in loss ratios was due to a short-term uptick in claim incidence, particularly in higher frequency ailments. “We do expect this to normalise and end the year with retail health loss ratios back in the 65-70 percent range,” he said. While ICICI Lombard reported a 29 percent rise in net profit to Rs 747 crore, the elevated claims pushed the company’s overall combined ratio, to 102.9 percent, compared to 102.3 percent in the year-ago period.

Standalone health insurer Star Health also saw pressure building on its claims side. The company’s health loss ratio climbed to 68.5 percent, up from 66.9 percent in Q1 FY25, and its overall loss ratio rose to 69.5 percent.

At Niva Bupa, the loss ratio rose nearly 300 basis points to 68 percent. The rise was particularly sharp in the group health segment, where competitive pricing and higher claim frequency drove losses. CEO Krishnan Ramachandran noted that the company is proactively adjusting its portfolio mix and tightening risk filters to protect margins. “We are monitoring utilisation patterns closely, especially in corporate group health where claim ratios are high,” he said. However, he added that he was uncertain about when claim ratios would normalise and declined to give a timeline.

New India Assurance, too, continued to face elevated claims pressure. The company’s incurred claims ratio increased to 109 percent in Q1, up from 106 percent a year ago. CMD Girija Subramanian in the company analyst call said that medical inflation, currently estimated at around 14 percent, is eroding margins, especially in the senior citizen segment where IRDAI mandates a 10 percent annual pricing cap. New India’s combined ratio stood at 116.2 percent in Q1, with CMD Girija Subramanian attributing the elevated figure partly to large aviation claims, including the Air India accident, for which the company was one of the lead insurers, as reported by Moneycontrol.

SBI General Insurance, however, was the outlier among large players, reporting a decline in its loss ratio to 81.7 percent, compared to 86.2 percent a year ago. The improvement, according to the management during the analyst call, stemmed from tighter underwriting across commercial and motor books, better risk selection in health, and fewer high-ticket claims.

In contrast, motor insurance for these insurers, while not a growth driver, remained relatively steady in terms of claims.

Companies like ICICI Lombard scaled down their exposure to commercial motor and long-tail third-party lines, citing weak pricing and stagnant IRDAI-regulated tariffs. Still, claims experience remained largely stable, with no significant deterioration in loss ratios across private car or two-wheeler portfolios.

The fire and engineering portfolios, too, showed some positive trends, with improved claims experience supported by stronger pricing and fewer catastrophic losses. According to an earlier Moneycontrol report, the fire segment in fact made a comeback this quarter, growing about 17 percent year-on-year in Q1, while engineering insurance grew over 20 percent, helped by price stability and selective underwriting by larger insurers.