Motor third-party insurance premiums grew by 9% in September 2026, trailing the 13% increase in the broader motor insurance market. This slowdown follows a June 2026 Supreme Court order that raised liability expectations for claims involving homemakers. While many private insurers are prioritizing the more profitable own-damage business to manage rising legal costs, SBI General Insurance bucked the trend with 32% growth in its third-party segment.
Motor third-party insurance, a mandatory coverage in India, witnessed a 9% growth in September 2026, falling behind the 13% expansion seen in the total motor insurance market. This sluggish performance in the third-party segment contrasts with the 17% growth recorded in the own-damage category, which remains an optional but higher-margin product for insurance firms.
This divergence is linked to a June 2026 Supreme Court directive that established economic value for domestic work performed by homemakers. This ruling requires insurance companies to pay higher compensation in accident liability claims where the victim is a non-earning homemaker. Because third-party coverage is mandatory and involves potential liability for death or bodily injury, insurers face the risk of higher claim costs without an immediate adjustment in premium rates.
To protect profit margins, several private insurance companies have become cautious, slowing down their expansion in the third-party space. This defensive strategy aims to mitigate potential losses from these higher compensation payouts. Instead, these firms are focusing their efforts on the own-damage segment, which allows for better risk assessment and pricing, and is less affected by the recent judicial changes.
An exception to this trend is SBI General Insurance, which reported a 32% growth in its third-party business in September. While private peers have generally kept growth between 11% and 20% in the last two months, the company's aggressive stance highlights a different appetite for risk in the current environment. According to analysts at Kotak Institutional Equities, this change in strategy reflects how insurance companies are managing their portfolios in response to judicial precedents.
For investors and industry observers, the key monitorable will be the impact of this ruling on loss ratios, which measure the amount paid in claims against the premium collected. As the industry grapples with the long-term financial consequences of higher compensation payouts, the sustainability of growth in the third-party segment remains uncertain. Future updates from regulators regarding premium adjustments or company-specific disclosures on claims experience will be critical for understanding how this segment evolves.