The general insurance industry posted a modest 9% growth during the April–June quarter of the current financial year (Q1FY26) as compared to 13% in the same period last year. This was attributed to subdued performance in the motor own damage (OD) segment and muted growth across several other business lines. However, the overall growth was supported by a robust 38% increase in the personal accident segment and a healthy 17% rise in the fire insurance segment, according to a latest report by Emkay Global.

As per the report, the Motor OD business registered just 5% growth in Q1 FY26 versus 15% in the year ago period, primarily due to a slowdown in new vehicle sales. Meanwhile, the Motor Third-Party (TP) segment saw a modest 11% growth, constrained by the absence of any hike in TP premium rates.

In the health segment, retail health insurance posted a modest 9% growth as against 19% in Q1 FY25, driven mainly by standalone health insurers (SAHIs). However, the segment was impacted by the implementation of the 1/n regulation, which affected accounting treatment for multi-year policies.

Meanwhile, the group health segment grew by 7.4% year-on-year (YoY), although intense competition ahead of the expenses of management (EoM) limit deadline capped overall expansion. Additionally, the credit attachment segment also faced pressure due to the 1/n accounting regulation.

“Pricing discipline in the Fire segment resulted in a healthy 17% growth during Q1, driving 13% growth for the Commercial Lines segment,” the report noted.

Motor segment outlook remains muted

During Q1FY26, the motor segment reported a modest 9% growth, on the back of 11% growth in the motor TP segment, whereas the motor OD segment saw a muted 5% growth. This was attributed to slowdown in new vehicle sales and increased pricing aggression resulted in muted growth for the Motor OD segment.

Among insurers, public sector undertakings (PSUs) outperformed, clocking 10% growth in Motor OD, whereas leading private insurers ICICI Lombard and GoDigit posted subdued growth of just 5% in this segment.

Despite no rate hike in the Motor TP category, PSUs delivered a strong 21% growth, outpacing private players who recorded approximately 7% growth. Notably, GODIGIT posted a 21% rise in the Motor TP segment, while ICICIGI’s growth remained flat.

“Ahead, the continued slowdown in new vehicle sales and no price hike in FY26 are likely to drive a muted outlook for the Motor segment,” Emkay said in its report.

1/n regulation impacts retail health

The report noted that the retail health insurance segment posted a moderate 9% year-on-year growth in Q1FY26, impacted by the implementation of the 1/n accounting regulation, which affected recognition of multi-year premium income.

While standalone health insurers (SAHIs) led the segment with a 11% growth, public sector insurers posted a slightly lower 8% increase. Star Health maintained its leadership position in the market, registering around 9% growth in retail health premiums.

ICICI Lombard General Insurance (ICICIGI) logged a robust 31% growth in the retail health segment, driven by the successful launch of its new product 'Elevate'.

In contrast, the group health segment saw a sluggish 7% growth, reflecting intensifying competition as insurers prepared for the implementation of EoM guidelines. While private multiline players posted 11% growth, ICICIGI and GoDigit witnessed declines of 3% and 12%, respectively.

Fire and engineering lines lead in commercial insurance segment

Commercial lines insurance segment recorded a 13% YoY growth during the quarter under review, led by strong performances in the fire and engineering segments.

The fire segment grew by approximately 17%, supported by industry-wide pricing discipline, while the engineering segment posted an even stronger 21% growth.

Among leading players, GoDigit was the top performer with a robust 41% growth, followed by Bajaj Allianz General Insurance (BAGIC) with 11%, and ICICI Lombard (ICICIGI), which posted a modest 7% growth during the quarter.

Going forward, Emkay expects the challenging environment in the general insurance industry to persist through FY26E, driven by several headwinds, including a slowdown in new vehicle sales, the absence of a Motor Third-Party (TP) rate hike, heightened competition as the industry nears the Expenses of Management (EoM) limit deadline, and the lingering base impact of the 1/n regulation through H1FY26. Additionally, an uncertain macroeconomic environment is likely to further weigh on sectoral growth.

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