One Insurer Reported Under Ind AS and the Rest Did Not: Normalising a Panel That Sits on Two Regimes

On 29 August 2026, Asia Insurance Post reported that SBI General had recorded a net profit of Rs 426 crore for the first quarter of FY27 and had become the first Indian general insurer to adopt the Ind AS framework. The quarter showed gross direct premium income of Rs 3,506 crore, up 10.9% year-on-year, income of Rs 573 crore on the widest reported measure, up 17.4%, a combined operating ratio of 96.18% and solvency of 2.0 times.

GIC Re published its own Q1 FY27 results for the same quarter on the legacy basis: a combined ratio of 104.88% against 106.94% in the comparable quarter, an incurred claims ratio of 85.04%, profit after tax of Rs 1,922.04 crore and solvency of 4.32.

Both numbers are real. Neither is wrong. But if they sit in adjacent rows of the same insurer security spreadsheet under a column headed "combined ratio", the sheet is quietly comparing two different measurement systems and presenting the result as a ranking. For brokers and corporate risk managers who run an annual panel review, that is the practical problem of FY2026-27.

The Chambers and Partners Insurance & Reinsurance 2026 India guide sets out the timetable plainly: Indian insurers writing commercial lines adopt Ind AS 117 from 1 April 2026, with FY2026-27 the first reporting year. Adoption is therefore not optional and not indefinite. What varies is readiness, and readiness is what produced a first mover in the June quarter while the rest of the market continued to publish on the basis everyone has used for years.

That gap has a shelf life. Once every insurer has completed a full reporting year on the new basis and carries a restated comparative, the panel sheet becomes internally consistent again. Until then, a diligence process that ranks insurers on headline profitability ratios is producing an artefact of transition timing rather than a view on underwriting quality.

The Chambers guide identifies three mechanics that are already reshaping renewal conversations between brokers and corporate buyers: contract grouping, contractual service margin run-off and loss-component recognition. Each one moves profit around in time rather than changing the economics of the business written.

Contract grouping. Under the new basis, contracts are measured in groups defined by portfolio, profitability at inception and annual cohort. An insurer cannot offset a heavily loss-making group against a profitable one inside the same reported line. A commercial book that looked acceptable in aggregate on the legacy basis can surface an identifiable onerous group once it is split this way.

Contractual service margin run-off. Expected profit on a group of contracts is held back as a contractual service margin and released into the income statement as the insurer delivers cover through the year. Profit recognition follows the service pattern, so a quarter with heavy new-business writing can show less accounting profit than the same quarter would have shown on the old basis, even though the business written is identical.

Loss-component recognition. Where a group of contracts is onerous at inception or becomes onerous later, the expected loss is recognised immediately rather than emerging as claims are paid. On a book with a deteriorating line, losses arrive in the accounts earlier and more visibly than the legacy basis would have shown.

The combined ratio is the number most panel sheets rank on, and it is the number least able to survive the crossing. On the legacy basis it is built from net earned premium, incurred claims and management expenses on definitions the whole market shares. Under the new framework, revenue recognition, the treatment of acquisition costs and the timing of loss recognition all shift, and insurers may also present the measure on their own reconciliation of the two bases.

SBI General's 96.18% and GIC Re's 104.88% therefore differ for at least three reasons at once, and only one of them is underwriting performance:

1. Business mix. GIC Re is a reinsurer accepting cessions across the market, including catastrophe-exposed treaty business. A direct general insurer writing retail health, motor and corporate property is not running the same book, and a reinsurer's combined ratio has never been directly comparable to a direct writer's.
2. Measurement basis. One number is produced under the new framework and the other under the legacy basis, with different rules on when premium is earned and when a loss enters the accounts.
3. Genuine performance. GIC Re's 104.88% improved from 106.94% in the comparable quarter, which is a real movement worth reading, but it is only readable against its own prior-year figure on the same basis.

The practical rule for a transition-year panel sheet is to compare an insurer to its own prior-year figure on the same basis, and to compare insurers to each other only within a reporting basis. A cross-regime ranking column should be removed rather than footnoted, because a footnote does not stop a procurement committee reading down a sorted column.

Enough survives the transition to run a defensible diligence process. The panel sheet needs to be rebuilt around the measures that are stable rather than abandoned for a year.

• Regulatory solvency. The solvency ratio is a regulatory calculation against the IRDAI-prescribed control level of 1.5 times, not an accounting output of the reporting framework. SBI General's 2.0x and GIC Re's 4.32 are both readable as headroom above that floor, and both are readable against their own history. A reinsurer would be expected to carry more headroom than a direct writer, so the comparison remains a within-peer-group one.
• Top-line growth by line. Gross written and gross direct premium are collection-side measures. SBI General's GDPI of Rs 3,506 crore, up 10.9%, sits alongside health premium up 49.9%, personal accident up 26.3%, engineering up 95.4% and marine cargo up 16.8%. Those growth rates tell a buyer where the insurer's appetite is pointing this year, and they can be read against a peer's line-level growth without an accounting bridge.
• Claims behaviour. Settlement ratios, repudiation counts, average settlement time and grievance data come from regulatory disclosure and public reporting rather than the financial statements.
• Reinsurance support. The quality of an insurer's reinsurance panel, its treaty structure and its retention levels are contractual facts that do not move with the accounting basis.
• Ownership and capital commitment. Promoter identity, recent capital infusions and stated capital plans are unaffected.

Five changes make an insurer security file survive FY2026-27 without producing misleading rankings.

1. Add a reporting-basis field to every insurer row. One column, two values, populated from the insurer's own results release. Every downstream comparison keys off it. This is the single highest-value change and takes an afternoon.
2. Split the profitability block into two sub-tables. Insurers on the new basis are ranked against each other, insurers on the legacy basis against each other. No sorted column crosses the two.
3. Promote solvency and growth to the primary screen. For this year, the first-pass filter on whether an insurer stays on the panel should run on regulatory solvency headroom, premium growth and claims behaviour, with profitability ratios reviewed as commentary rather than as a score.
4. Hold each insurer against its own trend. Three years of that insurer's own history on a consistent basis is more informative in a transition year than a single quarter measured against a peer on a different basis.
5. Record the transition date. When an insurer switches, the sheet should note the first reporting period on the new basis, because the four quarters after that date will show discontinuities that are accounting effects and not deterioration.

The transition creates a legitimate reason to ask insurers questions that would otherwise sound intrusive, and most finance teams have the answers prepared because they have been building them for the audit.

• Which reporting basis will apply to your published results for the current financial year, and from which quarter?
• Where the new basis applies, will you publish a reconciliation of the combined ratio to the legacy definition for the transition year?
• Has contract grouping identified any onerous group in the commercial lines relevant to our programme, and does that change your appetite or pricing on those lines at renewal?
• Has the transition changed your retention or treaty structure for the lines we place with you?
• What is your solvency position, and does the accounting change affect the way it is calculated or only the way profit is reported?

The last question matters more than it looks. Buyers sometimes assume an accounting change flows straight into the regulatory capital position. Keep the two separate in the file and ask the insurer to confirm the treatment rather than inferring it.

For the broader framework on assessing counterparty strength, the approach in insurer financial security and counterparty risk for corporates still holds. What changes this year is only the reliability of one input.

With FY2026-27 the first reporting year for insurers writing commercial lines, the mixed panel is a defined problem rather than an open-ended one. By the time FY2027-28 renewals are being placed, the comparison set should be consistent again, with restated comparatives available for most of the market.

The work to do in the meantime is small and mostly clerical. Add the basis field. Split the profitability tables. Move the weight in the scoring model. Ask the five questions at renewal and file the answers. None of it requires an accounting specialist, and all of it prevents the specific failure mode of this year, which is a panel decision made on a sorted column that was never comparable.

The accounting change itself is worth understanding in more depth than a diligence checklist needs. The measurement models, the contractual service margin and the transition approaches are set out in insurance contracts accounting under Ind AS 117, and the capital-side consequences for commercial underwriting appetite are covered in risk-based capital and Ind AS 117. For a panel review due this quarter, though, the immediate task is narrower: make sure the sheet knows which insurers are reporting on which basis, and stop it from ranking across the two.