Risk environment and reinsurance terms challenge profitability
Against this backdrop, insurers are operating in a more demanding risk and capital environment. Reinsurers have been revisiting catastrophe exposures, which is contributing to higher costs for reinsurance programmes. This is putting upward pressure on pricing in motor and property portfolios, particularly those exposed to natural catastrophe risk. “Competitive intensity in the general insurance space, particularly in corporate lines across domestic and international markets, increased, leading to softer pricing trends and some pressure on underwriting discipline. This environment could weigh on profitability, with the possibility of relatively weaker financial performance for (non-life) insurers from Q1FY27 onwards, especially if claims experience becomes less favourable,” said Priyesh Ruparelia, director, CareEdge Ratings, as reported by The Telegraph. Ruparelia also pointed to geopolitical developments, noting that tensions in West Asia are affecting marine, aviation, and transit (MAT) covers and construction costs. He said these tensions “remain a key overhang, with the potential to disrupt marine trade, elevate risk exposures and trigger repricing across segments, possibly leading to a broader recalibration of underwriting and risk management practices.”
