Detailed Narrative
Economic and Industry Overview
The Indian economy sustained robust growth, with GDP growing 7.8% in Q1 FY26, a 5-quarter high. A sovereign credit rating upgrade by S&P Global reflects enhanced confidence. Recent policy actions, including a 100-bps repo rate cut, targeted income tax incentives, and GST framework overhaul, are projected to inject ₹2,200-₹3,100 billion into the economy, boosting consumer sentiment and economic activity. These reforms are expected to significantly benefit the non-life insurance sector.
Impact of GST Reforms on Insurance Sector
The exemption of GST from individual health insurance premiums is expected to make healthcare protection more affordable, increasing coverage. Rationalization of GST rates in the automobile sector has lowered vehicle ownership costs, encouraging private mobility and upgrades to premium models. ICICI Lombard is committed to passing the complete benefits of lower GST rates to policyholders. Management is optimistic about the demand momentum and increased volumes, particularly in Retail Health, despite potential impacts on input tax credit for sourcing.
Segmental Performance and Market Share
The company reported a GDPI de-growth of 0.5% for H1 FY26, against an industry growth of 7.3%. Excluding Crop and Mass Health, GDPI grew 3.5% versus industry's 10.5%. Retail Health was a strong performer, growing 25.2% for H1 FY26, significantly outpacing the industry's 9.3% growth, and increasing market share from 3.2% to 3.7%. The Motor segment grew 2.2% for H1 FY26, below the industry's 7.6%, but saw an uptick in September 2025 due to festive demand and GST rate cuts. Commercial lines grew 6.5% against an industry growth of 14.2%, with Fire segment growing 36.4% in September 2025.
Underwriting Performance and Combined Ratio
The overall combined ratio for the company was 104.0% for H1 FY26, up from 103.2% in H1 FY25, primarily due to multiple CAT events. Excluding CAT losses, the combined ratio was 103.3% for H1 FY26. For Q2 FY26, the combined ratio was 105.1% (103.8% excluding CAT losses). The company's combined ratio of 102.9% in Q1 FY26 was over 12 percentage points better than the industry average, reflecting a continued focus on profitable growth and prudent underwriting.
Investment Performance and Solvency
Investment income grew 12.7% to ₹25.38 billion for H1 FY26 and 11.1% to ₹12.49 billion for Q2 FY26. Capital gains (net of impairment) stood at ₹6.16 billion for H1 FY26, an 18.2% increase. The solvency ratio remained strong at 2.73x as of September 30, 2025, higher than 2.70x at June 30, 2025, and well above the minimum regulatory requirement of 1.50x. The duration of the investment book is approximately 4.74 years with a yield to maturity (YTM) of 7.39%.
Customer-Centric Initiatives and Digital Adoption
The 'IL Sahayak' initiative provided on-ground claims support to over 58,000 Health customers in H1 FY26, with 94.4% rating their experience as exemplary. The company launched Differentiated Service Desks in June 2025 for senior citizens and high product density customers, handling over 96,000 calls. The 'IL TakeCare' app has crossed 18.4 million downloads, generating ₹2,088.2 million in GWP for H1 FY26, up from ₹888.1 million in H1 FY25. Motor claims efficiency improved, with 75.1% of non-OEM claims serviced by the Preferred Partner Network in Q2 FY26.