Institutional brokerage firm Nirmal Bang has initiated coverage on India’s general insurance sector, highlighting strong growth potential driven by rising penetration and premiumization. The firm has issued BUY ratings on Star Health (Target Price: ₹480) and ICICI Lombard (Target Price: ₹2,075), citing their market leadership, operational efficiency, and robust distribution networks.
Sector on a Growth Trajectory
India’s general insurance market has expanded at a 14% CAGR over the past decade, yet penetration remains low compared to global peers, presenting a significant opportunity. Motor and health insurance continue to drive demand, with the sector expected to grow 15-16% by FY28.
Private insurers currently control 56% market share (as of Dec 2024), a trend analysts expect to continue, given their superior profitability, innovative products, and diversified distribution channels. Nirmal Bang sees Star Health and ICICI Lombard as sector frontrunners, benefiting from these competitive advantages.
Regulatory Disruptions & IFRS-17 Impact
The sector is undergoing regulatory shifts, including the implementation of 1/n guidelines, composite licenses, and IFRS-17 accounting standards, which are expected to reshape business operations. While these changes have suppressed valuation multiples, analysts believe they will improve transparency and long-term sector stability.
Valuation & Outlook
Despite high underwriting losses in 9MFY25, investment income remains a key profitability driver for insurers. Nirmal Bang projects 15%+ ROEs for leading players, even with zero underwriting profits. With a long growth runway and sustained demand for motor and health insurance, the brokerage maintains a positive stance on the sector.
