Premium mobilisation: PSU non-life insurers outperform private players in June quarter

By | July 21, 2025
Chart showing PSU non-life insurers outperform private players in premium growth

In a surprising development, public sector non-life insurers have outpaced their private peers in premium collection for the June 2025 quarter. After years of trailing private players, PSU insurers are showing signs of a strong comeback.

PSUs Lead the Growth

During the April–June quarter, PSU non-life insurers reported a 14.6% year-on-year increase in gross premium collections. Their combined premium reached ₹27,787 crore, outpacing the overall industry growth of 8.84%.

New India Assurance led the surge with a 15.2% jump in premiums, collecting ₹12,299 crore. Its market share rose from 14.67% to 15.51%. Oriental Insurance posted an even stronger 21.4% growth, while National Insurance and United India Insurance recorded gains of 14.9% and 7.17%, respectively.

These numbers mark a notable shift in industry dynamics. PSUs, once perceived as lagging, are now leading premium mobilisation.

Private Insurers Lose Ground

Private sector insurers, in contrast, saw modest growth. ICICI Lombard managed only a 0.61% increase in premiums, totaling ₹7,734.9 crore. Its market share dropped from 10.57% to 9.75%.

Reliance General Insurance grew by just 1.60%, and Bajaj Allianz achieved 9.63% growth, still below the PSU average. The subdued performance has raised concerns among analysts about growth strategies in the private sector.

Industry Overview

The general insurance industry collected ₹79,301 crore in gross premiums in Q1 FY2025. This reflects an 8.84% growth over the same period last year. However, this rate is slower compared to earlier quarters, showing signs of market softening.

The health insurance segment, a major growth driver in recent years, expanded by 8.12%, reaching ₹32,343 crore. A year ago, it had grown by 16.58%, suggesting demand has cooled post-COVID.

Why PSUs Are Performing Better

Several factors helped PSU insurers outperform:

1. Strong Renewal Business

PSU insurers hold large group health and corporate fire insurance portfolios. High renewal rates in these segments supported consistent premium flow.

2. Minimal Impact from Regulatory Changes

The “1/n rule” requires insurers to spread premium income evenly over the policy term. Private insurers offering long-term policies saw larger accounting impacts. PSU players, focusing more on annual policies, remained less affected.

3. Growth in Fire and Engineering Insurance

Demand for fire and engineering policies increased, especially in infrastructure and industrial sectors. PSU insurers, with their legacy business in these areas, benefited the most.

4. Improved Customer Access

Public insurers have invested in digital platforms and customer service in recent years. Though private players lead in innovation, PSUs are catching up. Their reputation for reliability, especially among government employees, added to their advantage.

Private Players Face Multiple Challenges

Private insurers have relied on health, motor, and niche products for growth. However, recent shifts have made things harder:

  • Passenger vehicle sales slowed, weakening the motor insurance segment.
  • Health claims rose, squeezing margins.
  • The “1/n rule” hit their accounting-led revenue recognition.

Private companies will need to reassess their product strategies, pricing models, and customer engagement to stay competitive.

Can PSU Insurers Sustain This Momentum?

PSU insurers have shown they can compete. However, sustaining growth requires:

  • Faster claim settlements
  • Continued digital transformation
  • Customer-friendly policies
  • Efficient cost management

Historically, public insurers struggled with delays and bureaucracy. But with modern tools and government backing, they are better equipped today.

The question remains—can they maintain this pace as market conditions shift again?

What Lies Ahead for the Industry?

The insurance sector still holds huge potential. India’s insurance penetration remains low compared to global standards. With rising awareness and regulatory reforms, both public and private players have room to grow.

Key trends to watch:

  • Standalone health insurers may see renewed demand as healthcare inflation rises.
  • Tech-driven products like usage-based motor insurance and cyber coverage will gain popularity.
  • Tier-II and Tier-III cities could become the next battleground for market share.

In this evolving space, adaptability and trust will define leadership.

Conclusion

The June 2025 quarter saw a clear win for public sector non-life insurers. Their growth outpaced the industry and challenged private dominance. While this may not signal a long-term trend yet, it shows that PSUs are still relevant—and competitive.

With smart strategy and improved efficiency, PSU insurers could become stronger players in the coming quarters. Private companies, meanwhile, will need to adapt quickly to regain momentum in a maturing and more regulated market.