Insurance industry grew 9% in FY26, health and motor fastest growing segments, finds BCG report

India’s general insurance industry grew 9% year-on-year (YoY) in FY26 with Gross Direct Premium Income (GDPI) of ₹336,000 crore, according to Boston Consulting Group’s ‘General Insurance Sector Round Up’. BCG’s analysis report covers 34 general insurers and SAHIs across the market.

“The Indian general insurance industry continues to grow, and it is entering a more mature phase. The real story in FY27 is which insurers are successfully converting scale into disciplined, profitable underwriting,” said Pallavi Malani, MD and Partner at BCG and India Lead – Insurance.

In a release on Monday, BCG added that Gross Written Premium rose 10% YoY to ₹344,000 crore, with private insurers, including standalone health insurers (SAHIs), leading the market expansion with GDPI up 10% YoY. In comparison, public sector insurers grew GDPI by 8% YoY, it added.

Further, the report said that the insurance industry‘s underwriting metrics moved through a rebalancing phase as insurers recalibrated pricing and portfolio mix following a strong multi-year growth run: the combined ratio moved 2 points to 113%, PAT stood at ₹10,000 crore (down 23% YoY), and industry ROE settled at 6%, down from 9%, the previous year.

Which segments led growth of insurance sector?

• BCG’s report stated that growth was led by the Health segment — where rate rationalisation of the goods and services tax (GST) lifted full-year growth to 17% after a slower 10% in the first half.

In terms of profitability, Health segment posted a -7% ROE in FY26 as insurers continue to invest in scaling retail health distribution and infrastructure. SAHIs grew their share of industry GDPI by 2 percentage points, reflecting robust momentum in retail health, it added.

• This was followed by the Motor segment, which grew close to 9% even as renewal-heavy portfolios limited full pass-through from the 10.4% rise in auto sales.

Within Motor, Third Party business generated a strong 22% industry-wide ROE against -34% for Own Damage, highlighting the opportunity for insurers to optimize portfolio mix and claims management further, as per the report.

• Meanwhile, the Fire and Crop segments grew more modestly, as insurers leaned into pricing discipline on commercial renewals and calibrated crop discounting to meet Expense of Management (EOM) guidelines. These are the early signs of a market beginning to prioritise sustainable pricing over pure volume.

However, Fire and Crop were the most profitable lines, generating ROEs of 17% and 13% respectively. The report noted that profitability varied by line of business, reflecting each segment’s stage of development.

Private insurers hold fort, see market expansion

Further, the report noted that private insurers demonstrated resilient underwriting throughout the year, holding their combined ratio broadly steady at 109% (a marginal 0.4-point improvement) and their ROE near 9% (down just 56 basis points).

Here, large players had standout performance, combining 7% premium growth with a 2-3-point improvement in both loss ratio and combined ratio, and lifting ROE to 15% from 14%, highlighting that scale and underwriting discipline can go hand in hand.

Overall, public sector insurers saw combined ratio move to 128% and ROE to -4% from 2%, reflecting a period of active recalibration as these insurers work through legacy pricing and claims dynamics; BCG expects continued underwriting reforms to narrow this gap over time.

Insurance industry’s capital position ‘sound’

Further, the report noted that the capital and reinsurance posture of India’s general insurance industry remains “sound overall”. Against IRDAI’s required solvency margin of 1.5x, most private insurers remain comfortably capitalised, while PSU insurers outside New India have relatively less solvency headroom, pointing to an area of continued focus.

“The industry cedes just over 31% of GDPI to reinsurers overall, concentrated in Fire (82%) and Crop (56%) the two lines most exposed to catastrophic and weather-linked risk, where reinsurance plays its intended role in managing volatility,” it stated.