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India's Insurance Dip: Premiums Rise, Penetration Falls
1 Jan
Summary
- Life insurance penetration decreased to 2.7% of GDP in FY25.
- Overall insurance penetration remained flat at 3.7% in FY25.
- Total premium income for life insurers grew by 6.73% in FY25.
Life insurance penetration in India has seen a downward trend for the third consecutive year, settling at 2.7% of GDP in FY25. This decline occurs even as the total premium income for the life insurance industry experienced a growth of 6.73%, reaching ₹8.86 lakh crore. Private sector insurers showed stronger growth compared to the public sector Life Insurance Corporation of India.
The broader insurance sector's penetration remained unchanged at 3.7% of GDP in FY25. Non-life insurance, particularly health and motor segments, also saw modest growth, contributing significantly to the overall premium collections. Health insurance continues to be the largest non-life segment, followed by motor insurance.
Recent government initiatives, including raising the foreign direct investment limit to 100% and exempting GST on individual life and health policies, are expected to invigorate the sector. These measures aim to attract foreign capital and enhance affordability, potentially reversing the trend of declining insurance penetration.
