India’s general insurers lost ₹45,279 crore on their core business in 2025-26, up from ₹31,043 crore a year earlier, according to General Insurance Council figures. Premium income rose 9% to ₹3.36 lakh crore over the same period, and among general and standalone health insurers, only Universal Sompo kept its combined ratio below 100%. Yet ICICI Lombard reported a profit after tax of ₹2,772 crore for the year, and New India Assurance posted a net profit of ₹1,384 crore. The explanation lies in how insurance companies make money in India: underwriting is only half the business.
What an Underwriting Loss Means
Underwriting is the core job of taking on risk for a premium. An insurer makes an underwriting profit when the premium it earns exceeds the claims it pays plus the cost of selling and running policies, such as commissions, salaries and technology. When claims and costs exceed premium, the gap is an underwriting loss.
In 2025-26, the four public sector general insurers accounted for ₹29,071 crore of the industry’s loss, up from ₹18,863 crore. Private general insurers lost ₹16,682 crore, against ₹14,033 crore in 2024-25.
The Combined Ratio in One Number
The combined ratio captures underwriting performance as a percentage. IRDAI’s formula adds two parts: net incurred claims as a share of net earned premium, and commission plus management expenses as a share of net written premium. A ratio of 100% means the insurer broke even on underwriting.
Anything above means it paid out more than it earned. Oriental Insurance reported a combined ratio of 145.71% in 2025-26, which means it spent about ₹145.71 on claims and operating costs for every ₹100 of premium.
Float and Investment Income: Where the Profit Comes From
Insurers collect premiums upfront but pay claims later. The money held in between, known as float, is invested. ICICI Lombard, for instance, held 40.8% of its portfolio in corporate bonds, 35.0% in government securities and 18.7% in equity at the end of 2025-26. The returns can offset a loss on underwriting.
In 2025-26, private general insurers lost money on underwriting, yet their combined net profit rose 5% to ₹8,580 crore on the back of stronger investment income. Analysts note that insurers are increasingly dependent on that income to stay profitable.
A Worked Example: ICICI Lombard in 2025-26
ICICI Lombard’s combined ratio stood at 103.4% for 2025-26, so it spent more on claims and costs than it earned in premium. Its underwriting loss for the year was about ₹1,024 crore. Against that, the insurer held an investment book of ₹58,421 crore and earned a realised return of 8.47% on it.
At that rate, the book would earn close to ₹5,000 crore in a year, nearly five times the underwriting loss. After other items, profit before tax came to ₹3,659 crore and profit after tax to ₹2,772 crore.
Why the Gap Matters for Policyholders
Investment income cannot cover unlimited underwriting losses. The four public sector insurers together swung to a net loss of ₹10,051 crore in 2025-26, from a profit of ₹803 crore a year earlier. The RBI’s Financial Stability Report also flagged three of them, understood to be National, Oriental and United India, for staying below the mandatory 150% solvency ratio for five straight quarters. The solvency ratio compares the capital an insurer holds with the minimum it must keep, and it is the buffer that protects claim payments when underwriting and markets both turn weak.
For buyers, this is a reason to look past the premium quote and check an insurer’s claims record and solvency ratio in its public disclosures. MyRupia’s guide to how insurance works in India explains where to find those numbers and how to read them before choosing a policy.
Disclaimer: This MyRupia article provides information based on publicly available government, regulatory and industry sources. It does not constitute investment, financial, tax, insurance or legal advice. Information, examples, market data and expert views may change over time and do not represent a recommendation to buy, sell, invest in or surrender any financial product. Readers should consider their individual circumstances and consult a qualified financial professional before making financial decisions.