India’s general insurance industry reported a sharply higher underwriting loss in FY26 even as premium collections grew. For households, the pressure is most visible in health renewals and motor own-damage pricing.
India’s general insurance industry recorded an, while gross written premium grew 9.3% to around ₹3.36 lakh crore. The industry’s combined ratio deteriorated to 113% from 111% in FY25. The combined ratio being above 100% indicates that claims and underwriting expenses far exceeded premium earned from insurance operations.
The four public-sector multiline general insurers accounted for about ₹29,000 crore of underwriting losses, 58% more than a year earlier. Across the industry, aggregate net profit after tax fell 23% to ₹10,000 crore. The figures show a widening gap between premium growth and underwriting performance.
Health Premiums Face Sustained Cost Pressure
Health insurance is one of the clearest areas where households are seeing the inflationary effects. IRDAI Chairman Ajay Seth said in March that health insurance premiums had risen by about 10% to 12% annually over the previous three years. Medical inflation remains a major part of that pressure. Industry estimates cited by Reuters put healthcare cost inflation in India at roughly 12% to 14% a year. However, a March 2026 Finance Ministry reply to Parliament said IRDAI had not conducted a study isolating the effect of medical inflation on health premiums. The same reply listed ageing policyholders, higher sums insured and additional policy features among other reasons premiums can rise.
The government reply also said premium revisions for existing health products must be based on credible experience of relevant risk parameters and should consider policyholder grievances and market feedback.
Motor Own-Damage Rates Reflect Claims Experience
Motor insurance follows a different pricing structure. IRDAI allows insurers to set own-damage rates after filing them with the regulator, with pricing influenced by factors including vehicle age, insured declared value, discounts, loadings and past claims experience. Third-party premium rates are governed separately.
Motor own-damage premium income grew about 9% in FY26. At the same time, industry analysts have pointed to higher spare-part costs, repair expenses and claim severity as pressures on the segment, prompting tighter underwriting and greater pricing discipline. For motorists, those pressures can appear through revised own-damage rates or changes in discounts rather than a uniform industry-wide increase.
No-Claim Benefits and GST Offset Part of the Increase
Several existing policy features can offset part of the increase in the amount ultimately paid by a customer. In motor insurance, IRDAI says the no-claim bonus starts at 20% of the own-damage premium and can rise to 50% after successive claim-free years. In health insurance, no-claim benefits may take the form of a higher sum insured without an associated premium increase or a renewal-premium discount.
Choosing a higher deductible can also lower the premium because the policyholder agrees to bear a larger share of smaller claims. In motor own-damage insurance, voluntary deductibles can reduce the premium, while in health insurance deductible-based plans and super top-ups can make higher overall cover more affordable. The trade-off is higher out-of-pocket spending when a claim occurs, so the deductible should remain manageable for the household.
Super top-up policies provide additional cover after cumulative eligible expenses cross the specified deductible and can often provide additional cover more cheaply than raising base cover by the same amount, subject to deductible and policy terms.
Tax treatment has provided another offset. Individual health insurance, including family-floater policies, has been exempt from GST since September 22, 2025, after the rate was reduced from 18% to zero. The exemption does not prevent insurers from revising base premiums, but it removes GST from eligible individual health policies.
Also read: Health Insurance Explained: What You Must Know Before Choosing
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