Indian General Insurance Industry set to reach Rs 3.7 trillion GDPI by FY2026
Take a look at how India's general insurance industry is expected to grow 32% by FY2026.
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The general insurance industry in India is on track for significant growth, with its Gross Direct Premium Income (GDPI) expected to reach Rs 3.7 trillion by FY2026, marking a 32% increase from Rs 2.8 trillion in FY2024. This growth is fueled by rising awareness of insurance products, increasing disposable incomes, and enhanced digital penetration. These factors collectively contribute to the industry's robust expansion.
This growth will primarily benefit private insurers due to their strong capital positions, while public sector insurers (PSUs) may experience more moderate growth due to weaker capital reserves. The profitability of private insurers is expected to improve with better underwriting performance, whereas PSUs will likely face challenges in maintaining a strong combined ratio, impacting their net profitability.
The market share of private insurers in terms of GDPI is anticipated to grow, reaching 69% in FY2025 and 71% in FY2026, up from 68% in FY2024. This growth is largely driven by the health insurance segment, which accounted for a significant portion of the incremental GDPI in FY2024 due to rising awareness and larger policy sizes. The motor insurance segment also contributed to this growth, supported by an increase in new vehicle sales.
Despite natural catastrophic events in FY2024 affecting the fire insurance segment, the overall impact on the net loss ratio was manageable due to reinsurance and low retention. Private insurers benefited from improved investment income, enhancing their profitability, with their Return on Equity (RoE) expected to reach 13.3% in FY2025. In contrast, PSU insurers, although posting a small net profit in 9M FY2024 due to an improved combined ratio and higher investment income, still face significant capital requirements to meet regulatory solvency margins, estimated at Rs 94-102 billion by March 2025.
The general insurance industry in India is on a promising trajectory, with GDPI expected to reach Rs 3.7 trillion by FY2026. This growth is fueled by economic expansion, increased awareness, technological advancements, and segment-specific developments. While challenges exist, they also pave the way for innovation and collaboration, ensuring that the industry continues to evolve and meet the dynamic needs of consumers. As the industry expands, it will play a crucial role in safeguarding the financial well-being of individuals and businesses across the country.