Floods and falling fire rates hurt general insurers in September quarter

Flood claims, falling fire insurance rates and a Supreme Court ruling on motor accident compensation hurt India’s listed multiline general insurers in the September quarter, even as standalone health insurers turned in underwriting profits.

New India Assurance, the country’s largest general insurer, reported a standalone net loss of ₹1,267 crore in the quarter, against a profit of ₹63 crore a year earlier. Its combined ratio, which compares claims and expenses with premiums, rose to 156.2% from 139.8%, meaning it spent about ₹156 for every ₹100 of premium. A ratio above 100% indicates an underwriting loss.

New India’s incurred claims ratio rose to 133.7% from 108.7%, while its expense ratio, which covers commissions and operating costs, fell to 22.5% from 31.1%. This means the worse combined ratio came entirely from claims. The expense ratio was worked out from New India’s standalone results filing.

Profit at reinsurer General Insurance Corporation of India (GIC Re) fell 14% to ₹2,456 crore as its combined ratio climbed to 110.2% from 108.5%. ICICI Lombard General Insurance, the country’s largest private insurer, reported a 15% rise in profit to ₹946 crore, though its combined ratio worsened to 107% from 105.1%, partly because of catastrophe losses of ₹118 crore.

“Profitability has slipped because of the claims,” said Saurabh Bhalerao, director and head of BFSI research at CareEdge Group. He said underwriting losses were driven mainly by flood claims in Gujarat, north India and the northeast, alongside discounts in commercial insurance. “Slightly lower premiums plus natural catastrophes pushed up the combined ratio, which then impacted profitability,” he added.

Price wars drag down fire rates

Fire premiums fell about 24% in the quarter, according to Emkay Global Financial Services, which attributed the decline to “increased discounting and pricing aggression, led by higher reinsurance capacity in the market.” Kotak Institutional Equities said the fall eased in September, when fire premiums dropped about 15% compared with 25-30% in the previous two months.

Fire insurance accounted for 7.1% of total multiline premiums in the first half of FY27 (April-September 2026), down from 10.5% a year earlier, according to the latest General Insurance Council data. Intense market competition drove the sharp decline in share.

In June, the Supreme Court ruled that a homemaker’s unpaid domestic work has economic value and must be counted when deciding compensation for road accident victims under the Motor Vehicles Act. Instead of equating her income with a daily-wage labourer’s, the court valued it at ₹30,000 a month and added “loss of domestic care” as a separate head of compensation.

Since insurers pay these awards under compulsory third-party cover, the ruling raises their liability on pending and future claims. New India said in a statement accompanying its results that it set aside an additional ₹715 crore for motor third-party claims “based on an initial assessment of the possible losses,” adding that “the lack of premium revision in the motor TP (third-party motor cover) segment continues to hurt the company and the industry.” Kotak Institutional Equities said in its 19 October note that third-party motor premiums grew only 9% in September, probably because of “lower focus on most players in this segment, following the recent court ruling”.

Meanwhile, standalone health insurers delivered strong earnings growth during the quarter. Star Health and Allied Insurance’s profit more than tripled to ₹265 crore under Indian accounting standards, and its combined insurance service ratio improved to 98% from 100.9%. Niva Bupa Health Insurance’s profit more than doubled to ₹136 crore, with the ratio improving to 98.8% from 103.1%.

Retail health premiums across the industry rose about 31% in the quarter, according to Kotak, and Emkay linked the momentum to improved affordability after the goods and services tax (GST) exemption on individual health policies. Bhalerao, however, said the quality of that growth was uneven. “Growth has come from high-value policies rather than new customers,” he said.

Investment gains soften impact

Investment gains cushioned the blow across the sector. New India booked about ₹1,800 crore in capital gains by selling part of its stake in the NSE Ltd, while ICICI Lombard’s investment income rose to ₹1,554 crore from ₹1,249 crore a year earlier.

Emkay said the slowdown in growth at private listed multiline insurers was driven by “a focus on profitability amid a challenging environment”.

“The late-September floods will weigh on balance sheets even before claims are filed, because insurers must set aside reserves for losses that have occurred but not yet been reported,” Bhalerao said, implying that the pressure may not end with the September-quarter results. “A higher number of natural catastrophes will drive higher reserving, which will impact everything, solvency as well as profitability.”

New India’s solvency ratio, a measure of its capital buffer, fell to 1.61 times from 1.80 times at the end of June, just above the regulatory minimum of 1.5 times. GIC Re’s solvency stood at 4.18 times, while ICICI Lombard’s rose to 2.74 times from 2.68 times on 30 June.

Mint reported in October that investors would track the impact of the Insurance Regulatory and Development Authority of India’s (Irdai’s) proposed limits on commissions and expenses of management. Emkay said the proposed distribution reforms are “likely to drive better discipline” in the market, though it remains watchful of the final regulations.