Non-life insurance premium growth decelerates despite rising value: Report

Despite a sustained rise in absolute terms, the growth rate of premiums in the non-life insurance industry has been steadily declining over the past few years, indicating mounting pressure on the sector, a recent report by CareEdge revealed. 

While premiums have continued to rise in absolute terms—from ₹17,808.8 crore in June FY23 to ₹23,422.5 crore in June FY26, the pace of growth has weakened. In April, year-on-year growth dropped from 23.3% in FY23 to 13.5% in FY26. A similar trend was visible in May, when growth fell from 25.3% in FY23 to just 6.5% in FY26. June followed the pattern, with premium growth slowing from 20.6% in FY23 to 5.2% in FY26. 

The shift to the 1/n rule has played a major role in this slowdown, the report says. It has affected the way premiums are recognised, leading to weaker growth of health insurance and a muted performance in the passenger vehicle segment. Some of the decline was offset by steady renewals in commercial insurance.

June saw a slowdown in the growth of gross direct premiums underwritten across most segments. Public general insurers reported a 13.8% rise in monthly premiums, improving from 5.3% in June 2024. In contrast, private general insurers reported flat growth at -0.3% in June, compared to a 9.2% increase the previous year. 

Specialised PSU insurers recorded a sharp 42.5% decline in June 2025, continuing their downward trend. Standalone health insurers (SAHIs) maintained strong performance with 10.4% growth, though it was lower than the 22.4% rise in June 2024. Year-to-date (YTD) data show total premium collections increased by 8.8% in FY26 so far, down from 13.5% growth seen in the same period of FY25, reflecting a broad-based deceleration in industry momentum, according to a report by the General Insurance Council, Irdai.

The report noted that health insurance remains the largest segment within the non-life insurance industry. However, overall growth has slowed due to the 1/n rule and affordability issues stemming from rising premium prices. SAHIs have consistently outperformed in the healthcare segment. The public sector health insurance business, on the other hand, has continued to lag its private peers.

“Non-life insurance premiums crossed the ₹3-lakh crore mark in FY25, driven by supportive regulations, rising insurtech adoption, accelerating digitalisation, and an expanding middle class. The government’s Bima Trinity push is poised to accelerate growth in the non-life insurance sector. SAHIs are expected to maintain their dominance in the retail health space,” said Priyesh Ruparelia, director of CareEdge Ratings.

At the same time, the trajectory of motor insurance will closely follow vehicle sales and the upcoming revisions to third-party tariffs. “The proposed rollout of composite licences could reshape the competitive landscape in the medium term. However, rising competition and global geopolitical uncertainties will remain crucial watchpoints for the sector,” he concluded.

Growth in the non-life insurance industry, excluding health, stood at 6.4% as of June, compared to just 5.2% when health is included. Furthermore, a sizable proportion of this 6.4% growth was attributed to the motor and fire segments, which accounted for more than 71% of the non-life insurance excluding health, the report said.

Motor Own Damage (OD) grew by 5.3% by YTD FY26 (vs 14.6% for YTD FY25), and motor TP rose by 11.2% (vs 10.1% for YTD FY25). Muted PV sales and competition have contributed to lukewarm motor OD growth, whereas the motor TP segment has grown at a better rate. Additionally, The Ministry of Road Transport and Highways is evaluating a proposed upward revision in motor TP insurance premiums, following Irdai’s recommendation, which could support the growth in the motor TP segment while aiding insurers in improving profitability, the report noted.