General Insurance Faces Headwinds: FDI Hike & GST Impact

The general insurance industry is navigating significant changes driven by tax regime adjustments and escalating cost pressures. While reported year-to-date growth stood at 7.3% in September 2025, underlying industry expansion is estimated at 11-12%. This discrepancy stems from new premium recognition rules for long-term policies. Notably, the health insurance segment has shown robust recovery, with retail health premiums experiencing a substantial 32-33% increase in October following the GST waiver.

Health insurance has emerged as the largest segment, now comprising approximately 39% of total premiums. HDFC ERGO reports that accident and health constitute 46-47% of its business, with a strong focus on individual retail health. The company boasts a low claim rejection ratio of less than 3% and a rapid cashless claim approval turnaround time of around 24-25 minutes.

Despite these positive segments, the industry faces persistent profitability challenges, evidenced by combined ratios of 112-115%, indicating technical losses. Industry leaders advocate for urgent third-party motor price increases and greater pricing discipline. Reducing high expense ratios and expanding insurance reach are also crucial for returning the sector to profitability.