In FY24, India's insurance premium penetration accounted for 3.7% of the GDP, with life insurance making up 2.8% and non-life insurance comprising 0.9%. While the share of insurance to GDP declined, there was a modest increase in per capita premium from Rs. 8,035 (US$ 92.0) in FY22 to Rs. 8,297 (US$ 95.0) in FY23.
Non-life insurers are projecting double-digit growth in CY25. This optimistic outlook is attributed to a supportive regulatory environment and the introduction of innovative product offerings designed to meet customer needs.
India's life insurance sector showed strong growth in the first quarter of FY25, with first-year premiums surging by 22.91% YoY to Rs. 89,726.7 crore (US$ 10.75 billion), up from Rs. 73,004.87 crore (US$ 8.75 billion) in the first quarter of FY24.
India's insurance sector has witnessed significant growth, with the domestic market expanding at CAGR of 17% over the past two decades. It is projected to reach Rs. 19,30,290 crore (US$ 222.0 billion) by FY26. This growth has been driven by increased awareness, favorable regulatory changes, and greater participation from the private sector.
The Indian government has increased the Foreign Direct Investment (FDI) limit in insurance companies from 74% to 100%, enabling complete foreign ownership. This strategic decision is intended to attract additional capital into the long-term, capital-intensive insurance sector, ensuring that insurers invest all collected premiums within the country.
In FY25 (April-Jan), life insurers’ new business premiums grew to Rs. 3,05,912 crore (US$ 35.5 billion), according to Life Insurance Council data.
In the first-year premium share of life insurance in India, LIC dominates with 56.96%, while the private sector holds 43.04%.
Among the private players, SBI Life, HDFC Life and ICICI Prudential Life led the industry in premium collection. SBI Life collected Rs. 29,530 crore (US$ 3.42 billion) premium, while HDFC Life and ICICI Prudential Life received Rs. 25,672 crore (US$ 2.98 billion) and Rs. 16,916 crore (US$ 1.96 billion), respectively.
In the April-Jan period of FY25, the Life Insurance Corporation of India (LIC) recorded a 7.8% YoY increase in new business premium.
From total insurance new business premium collection, LIC alone contributed over 56.96% to the total new business premium collection. The insurer received close to Rs. 1.74 lakh crore (US$ 20.19 billion) as premium in FY25 (April–Jan) compared to Rs. 1.66 lakh crore (US$ 19.28 billion) for the same period.
The non-life insurance market in India reached Rs. 2,21,765 crore (US$ 25.7 billion) in FY24 (Until December 2023).
Non-life insurers (comprising general insurers, standalone health insurers and specialized insurers) recorded a 14.1% growth in gross direct premiums, gross premiums written off by non-life insurers reached Rs. 2,13,485 crore (US$ 24.7 billion) in FY24 (until December 2023).
No of non-life insurance policies witnessed a decline from 301.8 million in FY23 to 205.1 million in FY24.
In FY24, the linked premium was at 15% and 85% in non-linked premiums.
The Union Cabinet has sanctioned the extension of the Pradhan Mantri Fasal Bima Yojana and the Restructured Weather-Based Crop Insurance Scheme until FY26, with a total budget allocation of Rs. 69,515 crore (US$ 8.06 billion).
Life Insurance Corporation of India (LIC) has been recognized as the leading insurance brand, boasting a consistent brand value of US$ 9.8 billion, a brand strength index score of 88.3.
As per a report published by Deloitte, in India the insurance market is slated to increase four folds in size over the next 10 years. The life insurance sector is the biggest in the world with about 70,000 Crore premiums yearly, and it is growing at a positive rate of 17% every year.
The insurance industry in India has witnessed an impressive growth rate over the last two decades driven by the greater private sector participation and an improvement in distribution capabilities, along with substantial improvements in operational efficiencies.
Private players have seen decent growth in individual single premium, group single premium, and individual non-single premium.
As announced in November 2023, Zurich Insurance Group is set to acquire a majority stake in Kotak General Insurance, marking the first major foreign investment in India's insurance sector in eight years. CCI has approved acquisition of 70% stake by Zurich in Kotak Mahindra Company.
As informed in September 2023, the UK and India have agreed to launch a partnership to boost cross-market investment by the insurance and pension sectors.
In August 2023, Tata AIA launched a ULIP plan with benefits of critical illness cover-Tata AIA Pro Fit.
In October 2022, Policybazar’s launches its mobile app to facilitate the ease of insurance business for its advisors digitize their insurance business.
Canara HSBC Life Insurance launched its ‘Canara HSBC Life Insurance App’ on the 75th Independence Day of India. The app, available on android, iOS devices and web portal, offers access to policy details, the option to receive timely alerts, pay the premium, and track fund value among others.
Merger and acquisitions will continue to be a part and parcel of the insurance sector, which is a highly capital-intensive sector and can accommodate new entrants with specialised skill sets having long-term vision. The past developments in this sector and recent decision of the Mumbai National Company Law Tribunal (NCLT) allowing merger of Exide Life Insurance with HDFC Life is an indication that entities without requisite expertise may quit the sector.
Bajaj Allianz Life Insurance, a private life insurer, has entered into a strategic partnership with City Union Bank, one of the oldest private sector banks in India. This partnership will help the private life insurer offer a wide array of life insurance solutions to the bank’s existing and future customers, across their 727 branches.
Insurers can now launch new health insurance products without IRDAI’s nod. Earlier the flexibility was given for group insurance products but now retail products have also come under the new norms.
The insurance industry is expected to use this opportunity for introduction of customized and innovative products, expansion of the choices available to the policyholders in order to address the dynamic needs of the market, which will further help in enhancing the insurance penetration in India.
The life insurance industry is expected to increase at a CAGR of 5.3% between 2019 and 2023. India’s insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1%. In terms of insurance density, India’s overall density stood at US$ 78 in FY21. Premiums from India’s life insurance industry is expected to reach Rs. 24 lakh crore (US$ 317.98 billion) by FY31.
There are 26 life insurance and 47 non-life insurance companies in the Indian market who compete on price and services to attract customers, whereas there are two reinsurance companies. The industry has been spurred by product innovation and vibrant distribution channels, coupled with targeted publicity and promotional campaigns by insurers.
The market share of private sector companies in the general and health insurance market increased from 48.03% in FY20 to 49.31% in FY21 to 62.5% in FY23. The gross premium collected by life insurance companies in India increased from US$ 39.7 billion in FY12 to US$ 89.3 billion in FY22. In FY22, premiums from new businesses of life insurance companies in India stood at US$ 40.1 billion. The sum insured for the life insurance industry grew at 16.81% in 2021-22. In FY23 (Until October 2022), premiums from new businesses of life insurance companies in India stood at US$ 25.3 billion. In October 2022, life insurers’ new business premiums grew to Rs. 15,920.13 crores (US$ 1.94 billion), according to Life Insurance Council data. In FY23, non-life insurers (comprising general insurers, standalone health insurers and specialized insurers) recorded a 16.4% growth in gross direct premiums.
