Floods, NATCAT losses weigh on general insurers’ Q2 underwriting margins | Insurance News

Floods and other natural catastrophe (NATCAT) events added to underwriting pressure on general insurers in the September quarter, with leading insurers reporting higher claims from weather-related events and an increase in combined ratios.

Several parts of the country witnessed floods and cyclonic activity during the year, including the recent cyclones Arnab and Murasu. Earlier this year, the general insurance industry had estimated claims of nearly ₹5,000 crore, largely in the property segment, arising from floods in Gujarat.

New India Assurance, the country’s largest general insurer, described the September quarter as one of the most challenging in recent times, following an equally difficult preceding quarter. Gross direct premium income (GDPI) growth stood at just 5.14 per cent, primarily due to a steep decline in property insurance rates, said Lavanya R Mundayur, chairman and managing director of the insurer. “The property segment suffered significant underwriting losses as well, due to multiple large risk losses, and flood claims in Gujarat, North India, and Northeast India,” Mundayur said in the company’s earnings statement.

The insurer’s combined ratio, which measures underwriting profitability, deteriorated to 156.20 per cent in Q2FY27 from 139.77 per cent a year earlier. Its underwriting losses widened to ₹5,237.35 crore from ₹3,554.36 crore in the corresponding quarter last year.

ICICI Lombard General Insurance, the country’s largest private general insurer, reported an impact of around ₹118 crore from flood events during the quarter, compared with ₹73 crore in the year-ago period. Its combined ratio increased to 104.5 per cent from 103.9 per cent a year earlier. Excluding catastrophe losses, however, the ratio was largely stable at 102.7 per cent, against 102.6 per cent in the corresponding quarter last year.

Bajaj General Insurance also reported an increase in its combined ratio to 104.5 per cent in Q2FY27 from 102.3 per cent a year earlier. The deterioration was largely attributed to higher NATCAT claims and elevated loss ratios in the health segment. Excluding NATCAT losses, its combined ratio stood at 102 per cent.

“Losses from recent flood incidents in the country could put further pressure on general insurers’ underwriting performance. While building adequate catastrophe reserves can help absorb the impact, insurers will need to proactively strengthen reserving practices, reassess risk exposure and exercise tighter underwriting discipline to contain potential losses,” said Saurabh Bhalerao, director, CareEdge Ratings.

Despite the elevated claims experience, insurers have seen some stability returning to the property insurance market, following a period of sharp premium rate corrections.

“On the positive side, property premiums have started to show some signs of stability,” Mundayur said.