India’s insurance domestic investments grow 6.5% YoY in FY 2025

It was due to a slowdown in economic activity and vehicle sales.

India’s insurance sector’s gross private domestic investment (GDPI) grew moderately to 6.5% year-on-year in FY2025 due to a slowdown in economic activity and vehicle sales.

According to an Indian Credit Rating Company report, it was further impacted by the 1/n method of accounting and pricing pressure in the commercial lines of business.

Whilst the underwriting performance of Public Sector Undertakings insurers remained weak, it reported a net profit in 9M FY2025, supported by the sizeable realised gains on equity investments and lower combined ratios.

The solvency of the three PSU insurers remained weak at negative 0.85 times as of 31 December 2024, resulting in a sizeable equity requirement of $2.28b to $2.55b (INR152b to 170b) to meet the solvency of 1.50 times as of 31 March 2026.

Despite the deterioration in their combined ratios, the return on equity of select private insurers was higher at 13.3-14.0% due to the increase in gains on equity investments.

GDPI growth is expected to recover in FY 2026 with improved pricing discipline, higher vehicle sales, and any revision in Motor-TP pricing.

($1=INR66.49)