General Insurance Stocks Surge Up To 10% After Supreme Court Insurance Order

Among individual stocks, New India Assurance Company surged 10 per cent to ₹189.40 on the BSE in intra-day deals. The average trading volume at the counter jumped more than 15-fold, with a combined 29.91 million equity shares changing hands on the NSE and BSE.

At 12:47 PM, the three insurance stocks were trading higher in the range of 3 per cent to 6 per cent. In comparison, the BSE Sensex was down 0.01 per cent at 78,421.

The sharp outperformance of general insurance stocks on Wednesday came after a significant verdict delivered by the Supreme Court (SC) on Tuesday. The Supreme Court took serious note of the large number of vehicles operating without third-party insurance cover and directed the Centre to develop a pilot project under which fuel supply to vehicles could be refused at petrol pumps until valid insurance coverage was obtained.

The Supreme Court of India directed an increase in the mandatory third-party motor insurance coverage period for new vehicles, extending it to four years for new cars from the existing three years and six years for new two-wheelers from the existing five years.

The bench issued the order after observing that despite the 2018 multi-year mandatory insurance directive, nearly 56 per cent of vehicles on Indian roads, approximately 165.4 million out of 304.8 million vehicles, remain uninsured due to increased policy lapses after the expiry of the initial coverage period.

The Court also suggested linking petrol pump fuel supply with valid insurance status.

Implementation of the Supreme Court’s mandate extending multi-year third-party insurance is expected to act as a structural catalyst for general insurers such as ICICI Lombard, Go Digit, New India Assurance and Bajaj Finserv through Bajaj Allianz, according to a note by ICICI Securities.

Driven by strong macroeconomic fundamentals and proactive regulatory adjustments, India’s insurance sector is projected to record the fastest growth among G20 countries. Total premiums are expected to increase at an average rate of 7.1 per cent in real terms through 2028, significantly ahead of the global insurance market’s growth rate of approximately 2.4 per cent.

New India Assurance Company, in its FY26 annual report, said that the general insurance sector is on track to reach $57.3 billion by 2028. The company stated that the sector’s substantial growth potential is supported by an insurance penetration rate that remains at 1 per cent of India’s GDP, highlighting a vast untapped market.

"Expansion into underserved rural populations catalyzed by the mandates of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 alongside aggressive government infrastructure spending, is paving the way for sustained property and engineering insurance growth," the company added.

The general insurance industry in India has shown sustained growth over the past two decades. Increased private sector participation, expanded distribution networks, improved operational efficiencies and regulatory reforms introduced by the Insurance Regulatory and Development Authority of India (IRDAI) have contributed to this growth, according to ICICI Lombard General Insurance’s FY26 annual report.

The sector continues to benefit from favourable demographics, rising income levels, increasing financial awareness and strong regulatory support. However, non-life insurance penetration remains relatively low at 1.0 per cent of GDP compared to global averages, indicating significant scope for future growth.

The government and regulator continue to play a key role in promoting inclusion through the goal of ‘Insurance for All by 2047’, supported by policy interventions and structural reforms, the company said.

The Supreme Court’s directive on mandatory third-party motor insurance and measures aimed at reducing uninsured vehicles have brought renewed focus on the general insurance sector, strengthening investor attention towards major listed insurance companies.