India’s life insurance sector grew by 12.7% year-on-year in May, with total premiums amounting to Rs 3,04,632 crore. This growth rate was higher than April’s 8.4% but lower than the 15.1% recorded last May. The slower pace reflects the continued impact of revised surrender value rules implemented in October 2024.
Policy Sales Decline Despite Premium Growth
The number of life insurance policies sold dropped by 10.4% in May. Specifically, individual non-single premium policies fell by 10.5% to 1.67 million.
Despite the decline in policy volume, private insurers managed to grow premiums in the individual non-single segment. In contrast, the Life Insurance Corporation of India (LIC) saw a 7.8% drop in premiums for this category. The private sector’s performance was aided by a shift towards higher-value policies.
Annualized Premium Equivalent Shows Strong Growth
The industry’s annualized premium equivalent (APE) rose by 14.4% in May, compared to 12.0% in the previous month.
Industry Growth Outlook
The life insurance industry is projected to grow at a compound annual growth rate (CAGR) of 13.2% in APE from May 2023 to May 2025. Private insurers are expected to grow faster, at 13.8% CAGR, compared to LIC’s 12.4%.
ULIP and Group Business Trends
Growth in Unit Linked Insurance Plans (ULIPs) remained muted due to ongoing market volatility. Meanwhile, group insurance business was the primary driver behind May’s overall performance.
Shift in Distribution Strategy
Industry analysts predict insurers will place more emphasis on the agency channel as banks focus on deposit mobilization.
Regulatory Support and Future Prospects
New regulatory developments, such as the proposed Insurance Amendment Bill and initiatives like Bima Trinity, are expected to foster further market expansion.
According to CareEdge Ratings, the industry is forecasted to grow at 10% to 12% annually over the next three to five years. This growth will be driven by:
Expansion of private insurers
Product innovation
Enhanced distribution strategies
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