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Informist, Tuesday, Jan. 13, 2026

--ICICI Lombard: One-time impact from labour code changes INR 550 million 

--CONTEXT: ICICI Lombard General mgmt comments in post-result analyst concall 

By Kabir Sharma and Nandini Sinha

MUMBAI – An INR-550-million one-time cost from the implementation of India's new labour codes dented profitability at ICICI Lombard General Insurance in the December quarter, even as the insurer reported strong growth momentum across key segments such as motor and retail health, aided by a supportive macroeconomic environment and regulatory tailwinds, the company executives said during an earnings call.

The insurance company's net profit for the December quarter fell nearly 9% on year to INR 6.59 billion. Sequentially, the net profit fell almost 20%. Analysts had expected ICICI Lombard's net profit to rise 12% on year to INR 8.08 billion, according to the average of five estimates.

The one-time hit arose from the enforcement of four new central labour codes, including the code on social security, which expanded the definition of wages and mandated higher payouts for benefits such as gratuity and leave encashment. ICICI Lombard said the impact primarily reflected past service costs following actuarial valuation and was fully recognised in the third quarter and nine-month financials. In addition, around INR 170 million of unamortised cost will be spread over the next three years, in line with actuarial recommendations, the officials said. 

Excluding the impact of the labour code, the insurer's profitability metrics would have shown a stronger performance. Management said the adjustment was non-recurring in nature, although it cautioned that further refinements to the labour code framework could lead to incremental impacts in the future.

Despite this cost pressure, ICICI Lombard posted a steady operating performance in a quarter marked by improving economic conditions. For the nine months ended December, ICICI Lombard reported gross direct premium income of INR 213.72 billion, up 3.6% year-on-year, compared with industry growth of 8.7%. However, in the December quarter, the company outperformed the industry, recording growth of 13.3% against industry growth of 11.5%, leading to a rise in market share to 8.3% from 8.1% a year earlier.

Motor insurance premiums grew 9.3% in the December quarter, supported by a recovery in new vehicle sales and festival season demand. While nine-month growth in the motor segment remained lower at 5%, management highlighted a clear acceleration in the third quarter, with December registrations showing particular strength. ICICI Lombard retained its leadership position in motor insurance, with a market share of 10.7% for the nine-month period.

The health insurance segment emerged as a key growth driver, especially retail health, which benefited from the government's decision to exempt retail health insurance from GST. The company said the entire benefit of the tax exemption was passed on to customers, improving affordability and driving a surge in first-time buyers, particularly in tier-2 and tier-3 cities.

In the December quarter, ICICI Lombard's health insurance premiums rose 40.6% year-on-year, while retail health premiums surged nearly 86%, significantly outpacing industry growth. For the nine months ended December, the insurer's health business grew 13.8%, broadly in line with the industry, but with a sharp gain in market share to 4.0% from 3.2% a year earlier.

Management attributed the strong performance to sustained investments in distribution, a growing agency network, and the success of newer retail health products. It also pointed to improving awareness around health insurance and rising sum-insured levels, which it said were leading to better customer retention and lifetime value.

On the underwriting front, ICICI Lombard reported a combined ratio of 104.2% for the nine-month period, compared with 102.9% a year earlier. Excluding catastrophe losses and the wage code adjustment, the combined ratio would have been lower, reflecting tighter underwriting discipline, the company said.

Booking ahead, management said the domestic macroeconomic environment remained supportive, with consumption and investment trends expected to sustain demand across insurance lines. While competitive intensity in motor insurance remains elevated, the company reiterated its focus on profitable growth rather than chasing volumes.

"Our priority continues to be disciplined underwriting, customer-centric service delivery, and sustainable value creation," executives said, adding that the company aims to grow premiums 100–200 basis points faster than the industry over the medium term while maintaining return on equity in the 18–20% range.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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