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India's non-life insurance sector ended FY26 with a 9% increase in total direct premium income, reaching ₹3.36 lakh crore. The health insurance segment was the primary growth engine, surging 19% year-on-year to ₹45,866 crore. This significant rise was largely driven by the government's decision to remove GST on individual and family floater health policies, effective September 22, 2025, which made coverage more affordable and boosted uptake. Following this relief, standalone health insurers reported monthly growth rates between 35% and 40%. Key players saw substantial gains: Aditya Birla Health Insurance premiums grew by 29% to ₹6,238 crore, and Niva Bupa recorded a 27% rise to ₹8,586 crore. Star Health, the leading standalone health insurer, increased premiums by 11% to ₹18,605 crore, maintaining approximately 44% of the SAHI market share as of December 2024. The private sector dominated health insurance revenue, holding 65.94% in 2024, and is projected to be the fastest-growing segment with an average annual growth rate of 20.87% from 2025 to 2030.
The broader general insurance segment also expanded, growing 8% to ₹2.79 lakh crore. Public sector general insurers collectively increased premiums by 8% to ₹1.03 lakh crore, maintaining a 37% market share, with The New India Assurance leading this group with an 11% premium rise to ₹42,822 crore. Private general insurers saw similar 8% growth, reaching ₹1.76 lakh crore. However, individual performances varied. ICICI Lombard General Insurance grew by 7% to ₹28,712 crore; analysts currently hold a "Buy" rating on the stock with an average target price of ₹2,158.22. SBI General Insurance reported robust growth of 15% to ₹15,904 crore, aligning with expectations for strong FY26 performance. In contrast, HDFC Ergo General Insurance experienced a 5% decline to ₹15,025 crore, partly due to a strategic decision to scale back its motor-third party business. Tata AIG's gross premium reached ₹20,050 crore, showing year-on-year growth.
The Indian non-life insurance market is projected to grow by 8-11% annually over the medium term, tracking economic growth. However, the sector remains underpenetrated, with premiums at about 1.0% of GDP, significantly below the global average of 4.3%. Valuations differ among listed companies. ICICI Lombard trades at a price-to-earnings ratio of approximately 31-34. SBI General, while not directly listed, is strategically important and holds a 'CRISIL AAA/Stable' rating. Star Health and Allied Insurance commands a higher price-to-earnings ratio of around 61-62, reflecting strong investor confidence in its specialized health market. Analysts maintain a "Buy" consensus for Star Health, with an average price target around ₹530. New India Assurance, a public sector insurer, has a more moderate price-to-earnings ratio of about 18, suggesting lower growth expectations compared to private peers, who are predicted to increase their collective market share to 70% by FY27.
Despite positive forecasts, the sector faces several risks. The strong growth in health insurance is highly dependent on continued favorable regulation, such as the GST exemption; any changes could impact its trajectory. Intensified competition in health insurance may also lead to margin compression. Profitability for the broader non-life sector remains a concern, with some segments consistently showing combined ratios above 100%, indicating underwriting losses. A shift in IRDAI's reporting formats from October 1, 2024, excluding long-term premiums, could complicate year-on-year comparisons and mask true business momentum. Public sector insurers face challenges regarding technological investment and agility, potentially leading to further market share erosion against more dynamic private players. HDFC Ergo's strategic reduction in its motor-third party business highlights specific segment pressures and the difficulty in managing underwriting performance. Sector profitability is also vulnerable to fluctuations in investment income, with recent stock market volatility impacting investment gains. Industry experts project cautious optimism, with CareEdge Ratings forecasting 8-11% growth for the non-life market over the medium term, supported by regulatory reforms and economic momentum. Health insurance is expected to remain the largest segment, potentially reaching ₹1.40 lakh crore by FY27, while motor insurance is also anticipated to grow. Analyst consensus for major listed insurers like ICICI Lombard and Star Health remains largely positive, with "Buy" ratings and projected upside potential. However, the industry must navigate increasing competition, the sustainability of regulatory benefits, and the constant need for technological adaptation and product innovation to fully tap the Indian market's vast potential.