General insurance industry set for robust growth, GDPI to reach ₹3.7 lakh crore by 2025-26

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Rating agency ICRA expects a strong show by the general insurance industry in the next few years. Gross Direct Premium Income (GDPI) is estimated to touch ₹3.7 lakh crore by 2025-26, a 32 per cent rise from ₹2.8 lakh crore GDPI achieved in 2023-24.

While the growth for private insurers’ is expected to remain strong, that of PSU insurers is likely to remain moderate because of the weak capital position, ICRA has said.

The profitability for private insurers is likely to improve, supported by better underwriting performance, it added.

Neha Parikh, Vice President and Sector Head – Financial Sector Ratings, ICRA, said, “With higher growth, the market share of private insurers in terms of GDPI is likely to rise to 69 per cent for FY25 and 71 per cent for FY26 from 68 per cent for FY25”.

The health segment, which witnessed the strongest growth (accounting for ~50 per cent of incremental GDPI of ₹37,500 crore in FY2024), is likely to remain the key driver with the rising awareness of health insurance as well as increased ticket sizes, Parikh added. 

Though expected to be lower, the combined ratio for PSU insurers will remain weak, impacting net profitability. 

Moreover, the capital requirement of three PSU general insurers (excluding New India) is estimated at a sizeable ₹9,400-₹10,200 crore to meet solvency of 1.50x as of March 2025, assuming 100 per cent forbearance on Fair Value Change Account (FVCA), ICRA said.

The industry’s GDPI saw a robust 15.5 per cent year-on-year (YoY) expansion in FY2024, rising to ₹2.79 lakh crore supported by the health segment. 

Apart from this, the growth in the motor segment was healthy, supported by the increase in new vehicle sales (two-wheelers, or 2W, rose by 13.3 per cent YoY and passenger vehicles, or PVs, by 8.4 per cent YoY in FY24). 

Profitability for private players remained strong, supported by improved investment income, which is likely to continue. The RoE for select private players in ICRA’s sample set companies is expected to improve to 13.3 per cent in FY25 as the underwriting performance improves (combined ratio of 106 per cent in FY25 over 107 per cent (estimate) in FY24.