General insurance stocks rallied sharply on Wednesday, August 5, a day after the Supreme Court extended the mandatory third-party (TP) motor insurance period for new vehicles. Go Digit General Insurance jumped as much as 10.5% to Rs 290.90, New India Assurance rose 9.2% to Rs 187.50, and ICICI Lombard gained up to 7.7% to Rs 1,771.
The Supreme Court on August 4 directed that new cars must be sold with four years of third-party cover (up from three) and new two-wheelers with six years (up from five), despite opposition from IRDAI and the General Insurance Council.
Brokerages see meaningful earnings upside: Jefferies estimates the reforms could lift profit after tax (PAT) by 2-5% for Go Digit and ICICI Lombard, with Go Digit the larger beneficiary, and notes that technology-driven enforcement could sharply boost motor GWP growth. AMSEC estimates the extension adds Rs 760 crore of premiums for Go Digit (Rs 530 crore four-wheeler + Rs 230 crore two-wheeler) and Rs 1,010 crore for ICICI Lombard, with PAT gains of roughly Rs 70 crore and Rs 90 crore respectively. Motor TP contributed 42.5% of Go Digit's FY26 GDPI, 20% for ICICI Lombard and 14% for New India Assurance.
Experts warn the move could raise motor premiums by 20-30% and increase vehicle costs, though TP cover is only part of the total motor premium. Motor TP loss ratios at the end of FY26 stood at 65.1% for Go Digit and 63.8% for ICICI Lombard.
Sources: NDTV Profit, CNBC-TV18, Business Upturn (August 5, 2026)