The non-life insurance sector is facing many changes, with changes in the tax regime and increasing cost pressures. Price pressure is redefining competition and customers increasingly view service as a differentiating factor. The government also plans to introduce insurance laws (Amendment Bill 2025) to increase FDI from insurance to 100 percent and amend the LIC and IRDAI laws. business line spoke to Anuj Tyagi, MD & CEO, HDFC ERGO General Insurance about the trends and challenges facing the general insurance industry.
How is the general insurance sector performing, especially after the VAT exemption on individual health insurance premiums?
The sector grew by 7.3 percent year-to-date (YTD) in September 2025. This seems moderate compared to previous years, especially because the regulator has moved the long-term policy to 1/N premium recognition. Previously, a 10-year policy with a premium of €100 was fully booked up front, but now it is €10 per year, which mechanically reduces the reported growth. YTD October growth fell to around 6 percent, largely due to lower crop insurance premiums. Health has a significant share in long-term policies, so that also affects the booking. On a gross written basis (before 1/N), the sector’s underlying growth is around 11 to 12 percent. After the GST exemption, healthcare premiums have risen sharply; healthcare retail sales are likely to grow 32 to 33 percent industrywide in October. Car premiums increase as car sales increase. It is necessary to see how much the GST effect is compared to the wind in the festival season. And early November also looks encouraging.
Which segments are currently leading in non-life insurance? What is the business mix for HDFC ERGO?
In non-life insurance, healthcare is now the largest, accounting for approximately 39 percent of total premiums. It has grown, crop cover has been reduced and health has overtaken other lines. Then come the commercial, crop and motor vehicles. YTD October, the motorcycle sector is growing roughly by about 8 to 9 percent. For HDFC ERGO, healthcare is our largest segment. About 46 to 47 percent of cases consist of accidents and health. We focus on retail/individual healthcare and do very little in the corporate/government healthcare space. We have approximately 1.2 to 1.3 lakh healthcare purchasing agents, operating from approximately 900 locations (approximately 300 full offices and 600+ single-staff digital offices). We will expand the physical reach, digital presence, products and hospital connections in the future. Our health claim rejection rate is among the lowest in the industry at less than 3 percent (as per IRDAI data), while the approval time for cashless claims is less than 30 minutes, typically 24 to 25 minutes. We also have initiatives such as immediate discharge confirmations and prior approvals for chronic conditions.
How will you deal with the cost pressure following the exemption from GST on insurance premiums? Have you reduced commissions for distributors?
The right thing to do was to pass on the full GST benefit to customers, which we did as an industry. This created a mismatch in input tax credits, increasing insurers’ costs. In the spirit of partnership and to preserve customer benefits, some of that burden has been passed on to distributors in both life and general insurance. We continue to engage the government for input credit solutions.
Do you expect more insurers to go public in the future? What about HDFC ERGO?
There are two considerations in this regard. Firstly, Ind AS 117 and Risk-Based Capital (RBC) will significantly change the reported metrics including profits, combined ratio and capitalization. The industry is targeting April 2027 for Ind AS 117, with RBC in addition. As long as these do not stabilize, it will be difficult for investors to guarantee value. Second, the sector’s profitability remains weak, with the combined ratio around 112-115 percent, i.e. a technical loss of ₹12 to 15 per ₹100 premium. In my opinion, listings should wait until profitability is healthier and Ind AS/RBC has reached a settlement. For us, we don’t have any promotional plans at this time. Ultimately, however, it is a shareholder’s decision.
If general insurance profitability is now weak, what measures are needed to get the sector back into trouble?
There are four levers for this. There has been no meaningful increase in prices for third-party cars over the past six years, while the court-awarded claims inflation is 10 to 12 percent. We urgently need price increases for TP. Price discipline is also necessary. Competition is price-driven rather than service-driven. Superior service (e.g. low health rejection rates, faster cashless) should yield better prices. Expense ratios in the sector are high, around 29 to 30 percent. We need to reduce distribution and operating costs. Finally, there is also a need for deeper and broader coverage of insurance in more regions to bring more lives and risks into the insurance net.
How do you plan to expand the distribution network?
HDFC ERGO now has around 300 offices, 600 digital locations and around 1.3 lakh agents. We will open more digital offices, recruit more agents, launch new products and add partners. A significant part of our retail activities is digital. About 11 to 12 percent of retail takes place online. We are also expanding the networks of hospitals and garages. Directionally, the expansion includes distribution, products and digital.
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