Nomura has initiated coverage on India's non-life insurance sector with a bullish stance on health insurers, assigning 'Buy' ratings to Star Health and Allied Insurance Company and Niva Bupa Health Insurance Company. According to reports from CNBC TV18, the brokerage has set a target price of ₹675 for Star Health and ₹105 for Niva Bupa. The brokerage also initiated coverage on PB Fintech with a 'Neutral' rating and a target price of ₹1,590, while ICICI Lombard General Insurance Company received a 'Neutral' rating with a target price of ₹1,820. Nomura's selective approach prioritizes companies with strong premium growth and improving profitability, while remaining cautious on businesses where regulatory developments, competitive intensity, or valuation may limit upside. As per Nomura, the brokerage described India's non-life insurance industry as a '21st century's Mahabharat', highlighting intense competition among insurers, hospitals and distributors.
Health insurance has emerged as the fastest-growing segment, accounting for 41% of the industry's premium mix in FY26 and registering a 19% CAGR over the past decade. As reported by CNBC TV18, motor insurance, which contributes 32% of total premiums, recorded a 10% CAGR during the same period, while the commercial insurance segment grew at a CAGR of 12%. The brokerage noted that each segment operates within a distinct ecosystem, with health insurance relying on a network of distributors, hospitals and third-party administrators, while the motor insurance segment is closely linked to vehicle dealers, repair networks and the judicial system.
For Niva Bupa Health Insurance, Nomura expects 23% CAGR in premiums between FY26 and FY29 and estimates the company could achieve a return on equity (ROE) of 15.9% by FY29. The brokerage expects loss ratios to stabilize around current levels, which could support earnings even as premium growth remains strong. For Star Health & Allied Insurance, Nomura projects an ROE of 12% to 14.9% during FY27-FY29 and expects annual repricing, cohort-based pricing strategies, and execution across four key business pillars to support performance. The brokerage believes these measures could contribute to more predictable underwriting profitability over the medium term.
According to Nomura, India's non-life insurance industry has delivered a compound annual growth rate (CAGR) of 13% in gross written premiums between FY16 and FY26, with the market expanding to ₹3.35 lakh crore in FY26. The brokerage highlighted the critical role played by insurance distributors across the sector, estimating the industry's commission pool, covering both life and non-life insurance, stood at ₹1.08 lakh crore in FY25, showing a CAGR of 17% between FY16 and FY25.
For PB Fintech, Nomura initiated coverage with a 'Neutral' rating and a target price of ₹1,590, noting that the company has rapidly expanded its insurance distribution business with insurance contributing over 90% of revenue in FY26 and market share tripling over the past four years. However, the brokerage cautioned that pending regulatory reforms governing insurance distributors could materially alter commission structures and business economics, estimating these reforms could reduce PB Fintech's fair value by as much as 30%. For ICICI Lombard, while acknowledging the company's strong market position and consistent profitability, Nomura believes elevated competition in motor and commercial insurance could limit growth, with health insurance remaining the key earnings driver but the stock's premium valuation leaving limited room for upside without a favourable regulatory trigger.
