Indian Life Insurance Sector Sees Growth Amid Regulatory Changes
Growth in Life Insurance Premiums
New Delhi, July 12: The life insurance sector in India reported new business premiums totaling Rs 41,117.1 crore in June, influenced by the recent changes in surrender value regulations, a decline in credit life sales, and group single premiums, as highlighted in a recent report.
According to CareEdge Ratings, the life insurance market is projected to grow at a rate of 10% to 12% over the next three to five years, driven by innovations in products, favorable regulations, rapid digital advancements, efficient distribution channels, and enhanced customer service.
In June, the annual premium equivalent (APE) saw a 2.5% increase, which is a significant slowdown compared to the 20% growth recorded during the same month last year.
The industry experienced an 11% compounded annual growth rate (CAGR) in APE from June 2023 to June 2025, with private insurers achieving a growth rate of 15.4%, as per the report.
Saurabh Bhalerao, Associate Director at CareEdge Ratings, noted that the first quarter often sees sluggish performance for the life insurance industry, as it follows the fiscal year-end when many retail customers rush to purchase policies.
In the first quarter of FY26, quarter-on-quarter growth was recorded at 4.3%, a decline from the 22.9% growth seen in the same quarter the previous year, primarily due to subdued consumer demand and the effects of the revised surrender value guidelines that took effect on October 1, 2024.
Both LIC and private insurers reported growth in individual single and non-single premiums, indicating robust distribution channels and a shift towards higher-value policies in light of the new surrender value regulations, Bhalerao added.
The growth for the month was largely driven by individual and yearly group business, with an anticipated increase in focus on the agency channel, particularly as banks prioritize deposit collection.
Sanjay Agarwal, Senior Director at CareEdge Ratings, mentioned that the upcoming Insurance Amendment Act is expected to boost market penetration by attracting new entrants.
A gradual recovery is anticipated in FY26, partly due to private insurers extending their reach through deeper geographical penetration and the introduction of the Bima Trinity.