India’s push to attract more insurers and reinsurers is beginning to have an unintended consequence: too much insurance capacity is chasing too little business. The resulting glut is triggering a price war across corporate insurance, with premiums for fire, property and other commercial covers falling sharply as insurers compete for a limited pool of large corporate accounts.
“Over the last few months, insurers have been competing very aggressively for business, with increased appetite and capacity across several segments. This has resulted in significant price competition, particularly for softer occupancies and good loss experience,” said Deepak Madan, Head – Commercial Lines, Large Account Practices, Prudent Insurance Brokers.
The pressure is most pronounced in property and fire insurance, particularly for large, well-managed corporate risks with favourable claims experience. “The availability of capacity and intense competition for established accounts are driving substantial rate reductions,” he said.
The impact of the price war is already showing up in insurers’ books. Gross direct premium income of general insurers from fire insurance fell 28% year-on-year to ₹10,062 crore during April-July, even as other segments, including marine, engineering, motor, health and aviation, reported growth during the period.
“The insurance industry property premium crashed by 27.8% during the quarter and Q1FY27 being a property heavy quarter for New India Assurance,our overall GWP growth was muted at 2.9%,” Girija Subramanian, CMD, New India Assurance Company said. The country’s largest general insurer reported a 13% decline in fire insurance premium to ₹1,971 crore.
The squeeze is particularly stark in fire insurance, where 26 general insurers, including new-age players and established private and public sector insurers, are competing for a market that generated a premium of just ₹27,523 crore in FY26.
The fire segment has become a key battleground because of its importance to insurers’ overall books and reinsurance economics. “Fire insurance is more important to general insurance companies as it earns more reinsurance commission income for the insurers,” said Hari Radhakrishnan, an expert with the Insurance Brokers Association of India (IBAI).
Squeezed Fire Margins
The intense competition in fire is also spilling into other lines of business as insurers seek to make up for lost premium income. Global insurance broker Marsh said India has recorded significant rate reductions across several major insurance lines, including 25-30% in cyber insurance, 20-25% in professional indemnity insurance and 15-20% in directors’ and officers’ (D&O) liability insurance.
Regulatory Warnings Mount
The steep discounting has also caught the attention of the regulator. The Insurance Regulatory and Development Authority of India (Irdai) has warned general insurers against aggressive underpricing in the fire insurance segment after receiving complaints of discounts of up to 99% on large industrial risks. The regulator said such pricing could threaten insurers’ financial health and underwriting discipline.
At the heart of the pricing squeeze is a rapid expansion in available reinsurance capacity. More than two dozen reinsurers have started operating through GIFT City, while premium volume has surged 11-fold in five years to $1.2 billion.
“Many reinsurance companies are actively participating in the market, with new players having set up shop in the GIFT City,” Radhakrishnan says, adding that there are also start-up insurance companies entering the market and smaller players ramping up their capacity to quote more aggressively to grab market share. “The existing large players are themselves dropping rates to retain their accounts at any cost. This creates a downward spiral leading to the sharp decline in rates.”
For corporate India, however, the glut has created an unusually favourable buying environment. With insurers willing to offer broader coverage at lower prices, companies can use the soft market to reassess the risks they have traditionally left uninsured or increase the limits on existing policies, says experts.
“Rather than focusing only on lower premiums, organisations should use this period to review their insurance programmes to improve coverage and enhance limits where needed and address evolving business risks,” said Sanjay Kedia, Chief Executive, Marsh India.
The bigger question is how long insurers can sustain such pricing.
Radhakrishnan of IBAI believes the sharp decline in rates is unsustainable over the long term. The claim ratio for fire insurance for the Indian market as a whole was 73% in 2024-25, according to him. If premiums fall significantly while claims remain unchanged, the claims ratio could rise sharply, putting further pressure on underwriting profitability.
That risk could become more pronounced as companies take advantage of cheaper premiums to buy higher sums insured, increasing insurers’ exposure at a time when inflation is also pushing up the cost of replacing assets and settling claims.
Madan of Prudent Insurance Brokers sees the current pricing environment as cyclical rather than structural. “While we expect continued softness in the near term, it would be premature to assume that today’s pricing levels are the new normal,” he says.