Life Insurers’ New Biz Premiums Up 5% in FY25
The life insurance industry in India saw a modest 5% rise in new business premiums (NBP), reaching Rs 3.97 lakh crore in FY25. While this growth is an improvement from the 2% increase observed in FY24, it is significantly lower than the 18% growth seen in FY23 and 13% in FY22. The subdued rise in premiums was influenced by factors such as revised surrender value rules and weak demand for Unit Linked Insurance Plans (ULIPs) due to ongoing market volatility.
- The 5% growth in NBP indicates a steady recovery but falls short of previous years’ growth rates.
- Market volatility and regulatory changes have played a key role in affecting the industry’s performance.
Performance of Life Insurance Corporations
According to data from the Life Insurance Council, the Life Insurance Corporation of India (LIC), which remains the largest life insurer in the country, posted a 2% year-on-year increase in NBP to Rs 2.27 lakh crore in FY25. Despite this rise, LIC’s market share in the overall life insurance industry declined slightly to 57.05% from 58.87% in the previous fiscal year.
- LIC’s performance continues to reflect steady growth, though its dominance in the market is being challenged.
- The slight drop in market share is an indicator of increasing competition in the sector.
In contrast, private life insurers performed significantly better, with the 26-member private life insurance group reporting a 10% growth in NBP, totaling Rs 1.70 lakh crore.
- Private insurers have been able to capitalize on specific market segments and products, showing stronger growth than LIC.
Impact of Revised Surrender Value Rules
One of the primary factors affecting growth in FY25 was the introduction of new surrender value norms by the Insurance Regulatory and Development Authority of India (IRDAI), which came into effect on October 1, 2024. These new rules mandated higher payouts for policyholders who surrender their policies before maturity, a change that significantly impacted the premium growth for life insurers.
- Insurers had to rework their product portfolios and adjust agent commissions to minimize the effects of these new regulations.
- Despite efforts to adjust to these changes, the industry faced negative NBP growth for four consecutive months up to February.
However, in March 2025, there was a 2% increase in NBP, reaching Rs 61,439.11 crore, marking a slight recovery towards the end of the fiscal year.
- The March rebound suggests that the industry may be adjusting to the new regulatory landscape.
Performance of Major Life Insurers
Several private life insurers saw varied performance in FY25:
- HDFC Life Insurance reported a 13% increase in NBP, reaching Rs 33,761.94 crore.
- SBI Life Insurance saw a 7% decline in NBP, totaling Rs 35,576.67 crore.
- ICICI Prudential Life Insurance posted a robust 25% growth in NBP, reaching Rs 22,583.49 crore.
- Bajaj Allianz Life Insurance recorded a 7% rise in NBP, amounting to Rs 12,292.58 crore.
- These varying results highlight how individual companies have navigated the challenges posed by market conditions and regulatory changes.
- ICICI Prudential Life stands out with strong growth, reflecting its ability to adapt to market shifts and consumer demand.
Decline in Policy Sales
The total number of life insurance policies sold in FY25 was 270 million, which marks a 7% decline from the previous fiscal year. This decrease suggests a slowdown in the acquisition of new policies, possibly due to economic uncertainties and the ongoing volatility in the financial markets.
- The decline in policy sales indicates market challenges and the growing competition in the life insurance space.
- Despite the growth in premiums, fewer policies were sold, reflecting potential issues with customer acquisition strategies.
The life insurance industry in India has experienced moderate growth in FY25, with 5% growth in NBP despite facing challenges from market volatility and the implementation of new surrender value rules. While private insurers have outpaced LIC, the industry is adjusting to new regulations and shifting market demands. Moving forward, life insurers will need to navigate these challenges while capitalizing on emerging opportunities to maintain steady growth.
- While the 5% growth is a positive sign, the industry faces several headwinds that need to be addressed for sustained growth in the coming years.
- Private insurers are showing more resilience, suggesting potential shifts in the market landscape.
