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According to a new report by rating agency ICRA, three major public sector general insurance companies in India — United India Insurance, The Oriental Insurance, and National Insurance Company — may need a large capital infusion of ₹15,200–17,000 crore by March 2026.
This is because these insurers are not meeting the required solvency ratio of 1.50x. The solvency ratio is a key number that shows if an insurance company has enough money to pay its long-term claims and stay financially healthy.
The current solvency ratio (excluding a special fair value account) for these three companies is as low as -0.85, which is far below the regulatory minimum of 1.50x. If this fair value account (FVCA) is not considered, the capital need could rise to ₹33,200–34,000 crore, said Neha Parikh, Vice President and Sector Head at ICRA.
While there has been some improvement in profitability in the first nine months of FY25—thanks to better gains from equity investments and improved cost management—the combined ratio of these insurers is still high. A combined ratio over 100% means they are losing money on their core insurance business. For PSU insurers, ICRA expects a combined ratio of 120.4% in FY26, slightly better than the estimated 121.3% in FY25.
On the other hand, private insurers are doing much better. They are well-capitalized and are expected to see their combined ratio improve to 110% in FY26. Their profitability has also increased, mainly because of high returns from investments, even though they too faced higher losses in the motor insurance segment.
In terms of industry growth, ICRA forecasts that the general insurance industry’s gross direct premium income (GDPI) will grow by 8.7% to ₹3.21–3.24 lakh crore in FY26, up from ₹2.97 lakh crore in FY25. For FY27, GDPI could rise by another 10.9% to ₹3.53–3.61 lakh crore.
ICRA says the growth in FY26 will be helped by better pricing in commercial insurance, ongoing health insurance growth, and more vehicle sales. However, some of that growth might be slowed down by changes in long-term policy pricing regulations (1/n rule), especially in the first half of the year.
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