General Insurance Corporation of India (GIC Re) has flagged the influx of new reinsurers into GIFT City as a challenge for the industry, even as it remains optimistic about the long-term growth of India's insurance market.
“The outlook for the insurance and reinsurance industry remains positive, although the operating environment will continue to require careful navigation and risk discipline,” Hitesh Joshi said in his maiden annual report address as the company's recently appointed chairman. The insurer's FY26 annual report was released on Monday.
The chairman and managing director said this was particularly relevant given the influx of new reinsurance players into GIFT City.
GIC Re's domestic business remains its mainstay, contributing around 75% of its ₹44,006.74 crore gross premium income in FY26. However, the business has come under pressure on profitability and is undergoing a change in its composition.
GIC Re's domestic combined ratio, a financial metric used by insurers to assess underwriting profitability, rose to 107% in the June quarter, up from 102% in FY26. A figure above 100 means the reinsurer paid out more than it earned in premiums on that book.
On a consolidated basis, the combined ratio for FY26 was 106.02%, compared with 108.81% in FY25.
The share of obligatory cessions, business that general insurers are required to pass on to GIC Re, also fell to 33% of the domestic book in the quarter from 42% in FY26, as the reinsurer seeks to increase its non-obligatory business.
Joshi's outlook, however, remains anchored in the long-term expansion of the Indian insurance market. Economic growth, rising insurance penetration, infrastructure development and greater awareness of risk protection are expected to support demand, he said.
Emerging areas such as cyber insurance, surety bonds, liability covers, agriculture and other speciality lines could also create new opportunities for insurers and reinsurers. The regulator's push towards “Insurance for All by 2047”, alongside the transition to a risk-based capital framework and greater use of digital infrastructure, could further expand insurance coverage, according to Joshi.
The annual report also underlines why GIC Re is sitting on a substantial capital buffer. Its solvency ratio stood at 4.21 at the end of FY26, against the regulatory requirement of 1.5. Joshi said the higher solvency level should be viewed in the context of the reinsurer's efforts to regain its A- rating, reclaim lost international business and expand its global footprint.
Joshi previously told Mint that reinsurance operates in an integrated global market where pricing tends to correct itself over time. For domestic reinsurers, competitive strength ultimately depends on the capital available within the regulated entity, rather than the financial strength of its promoter.
The company is also preparing for the implementation of Indian Accounting Standards and a risk-based capital regime, while keeping capital available for opportunities arising from the green economy, new-generation risks and India's still-low insurance penetration.
Mint reported on 17 August that GIC Re had also reset its international growth ambitions after its overseas business shrank. Its long-standing goal of an equal domestic-international premium mix is now a long-term objective, with management working towards a 60-40 mix in the medium term.
For now, Joshi's message is one of measured expansion. GIC Re will focus on underwriting discipline, capital strength and portfolio quality while selectively pursuing international opportunities, even as competition intensifies at home.
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