Here's why shares of ICICI Lombard, Go Digit, and New India Assurance surged up to 8% today

Shares of ICICI Lombard General Insurance Ltd., Go Digit General Insurance Ltd., and New India Assurance Ltd. gained up to 8% on Wednesday, August 5, after the Supreme Court decision on Motor Third Party Insurance.

While shares of Go Digit and New India Assurance are up 8% each, ICICI Lombard shares are trading with gains of 3%.

The Supreme Court on Tuesday ruled that the period of mandatory motor third party insurance will be enhanced to six years from five for two-wheelers, and to four years from three for the four wheelers.

According to experts, the move could increase motor insurance premiums by 20% to 30% and therefore increase the cost of vehicles.

At the end of financial year 2026, the Motor Third-party contributed 20% to ICICI Lombard's Gross Direct Premium Income (GDPI). The same figure for Go Digit stood at 42.5% and for New India Assurance, it stood at 14%.

ICICI Lombard had a 8.92% market share in the Motor Third-party premium, while Go Digit and New India Assurance had a 6.5% and 10.37% market share respectively at the end of the previous financial year.

The loss ratio in the Motor Third-party business at the end of financial year 2026 stood at 63.8% for ICICI Lombard and at 65.1% for Go Digit. Loss ratio compares the total money paid by the insurance company for claims against the total premium income it earns from its customers.

Why is this move positive for General Insurance firms?

The move could be a positive for these general insurance companies as it will receive a higher motor third party premium on new vehicles. For two wheelers, the limit has been enhanced to six years from five, while for four wheelers, it has been raised to four years from three.

Negative Impact On Auto

The higher motor third party premiums could have a negative impact on auto companies as it will increase their prices.

A low ticket size would mean that two-wheelers could be impacted more compared to four-wheelers.

According to AMSEC estimates:

The changes will add ₹530 crore to Go Digit's four-wheeler premiums, while for two-wheelers, that stands at ₹230 crore.

Underwriting performance of the company could improve by ₹30 crore, while the company's Profit Before Tax (PBT) and Profit After Tax (PAT) could see an improvement of ₹90 crore and ₹70 crore respectively.

For ICICI Lombard, the changes will add another ₹740 crore to their four-wheeler premiums and ₹270 crore to the two-wheeler premiums.

The company's Underwriting performance could improve by ₹40 crore, while its PBT and PAT could improve by ₹120 crore and ₹90 crore respectively.

The Supreme Court has also suggested ANPR cameras to issue automatic e-challans to uninsured vehicles, state policy to have data on uninsured vehicles to penalize them, and IRDAI to deliberate with the Ministry of Road Transport and Highways on linking fuel supply to valid insurance for vehicles to increase compliance on motor insurance.