TP Premiums Drive Motor Insurance Growth: Mixed for General Insurers

Third-party (TP) premiums for motor insurance grew by 9.3% in FY26, slightly outperforming Own Damage (OD) premiums which grew by 9%. This contrasts with previous years where OD growth was stronger, and this shift occurred despite no increase in regulated TP premium rates.

This change in the composition of motor insurance growth is significant for general insurance companies. TP insurance is often less profitable due to regulated pricing and higher claims ratios. A higher proportion of TP premiums could put pressure on underwriting margins and overall profitability for insurers.

Major listed general insurance companies like ICICI Lombard General Insurance (ICICIGI), HDFC Life's general insurance arm (HDFC ERGO), and SBI Life's general insurance arm (SBI General) could see a mixed impact. While overall premium growth is positive, the shift towards lower-margin TP business might temper profitability expectations.

Traders should closely analyze the quarterly results of general insurance companies, specifically looking at their premium mix, claims ratios for TP vs. OD, and underwriting profitability. Any regulatory changes to TP premium rates would also be a key factor to watch.

• •TP premiums rose 9.3% in FY26, compared with 9% growth in OD.
• •Overall motor insurance expansion to about 9% on an estimated base of ₹1.08 lakh crore.
• •This contrasts with FY24, when OD grew a stronger 17.4% against roughly 10% for TP.
• •Latest shift comes despite no increase in regulated TP premium rates since the pandemic.
• •Risk flag: Rising claims frequency/severity