Solvency buffers at insurers thinning; general insurance sector more of a concern

RBI's financial stability report flags thinning solvency buffers across insurers, with the general insurance sector identified as the more acute near-term capital risk. While the life insurance sector remained compliant with the mandatory 150% solvency ratio throughout 2025-26, three public sector general insurers were below the threshold for five consecutive quarters from Q4 2024-25 to Q4 2025-26, marking persistent non-compliance. The general insurance segment also showed greater quarterly volatility and elevated underwriting losses, raising structural vulnerability concerns under adverse interest rate or equity market stress scenarios.