Life Insurance Premiums Hit ₹61,439 Crore in March as Policy Sales Fall 19% and Private Insurers Grow 9.8%
The life insurance industry in India demonstrated resilience with a modest 2% year-on-year increase in new business premiums for March 2025, reaching ₹61,439 crore. This growth follows a sluggish February performance and signals potential market stabilization.
Despite this premium increase, the sector faces challenges as policy and scheme sales declined by nearly 19%, totaling just 43.94 lakh for the month.
Premium Growth Despite Policy Sales Challenges
Several factors contributed to this divergent trend of rising premiums amid falling policy counts. The premium growth was primarily driven by improved performance in group business segments. Group single premiums remained the largest contributor at ₹33,543 crore, showing relatively flat year-on-year growth but maintaining strong market presence.
Individual single premiums gained significant momentum with an 11.34% rise to ₹7,420 crore. This indicates growing consumer preference for one-time payment policies over traditional regular premium plans. Individual non-single premiums showed more modest growth at 1.77%, reflecting ongoing challenges in the retail segment.
LIC, the market leader, reported a 2% increase in total premium collection, reaching ₹36,907 crore for March. The insurance giant maintained its dominant position with a 57.05% market share, though this represents a slight decline from 58.87% in the previous fiscal year.
Private Insurers Outpace Market Average
Private sector insurers demonstrated stronger growth dynamics compared to the industry average. The 26-member private insurance group collectively recorded a 9.8% rise in new business premiums for FY25, reaching ₹1.70 lakh crore. This significantly outperformed LIC’s 1.86% growth rate.
Several private players posted exceptional results. ICICI Prudential Life Insurance recorded an impressive 25% premium growth in FY25, collecting ₹22,583 crore. HDFC Life also performed strongly with a 13% increase, reaching ₹33,762 crore. Tata AIA posted 16% growth, ending the year with ₹10,321 crore in premium collections.
Newer market entrants demonstrated remarkable expansion. GoDigit Life grew premium collections by over 150%, leveraging aggressive expansion in group and non-single premium products. Bandhan Life (formerly Aegon Life) achieved nearly 98% premium growth following strategic realignment of operations.
Full Year Performance Shows Recovery Course
For the complete financial year 2024-25, the life insurance sector recorded a 5.13% rise in total new business premiums, reaching ₹3,97,336 crore. This represents significant improvement over the 2% growth seen in FY24, though remains below the robust 18% and 13% expansion recorded in FY23 and FY22 respectively.
Individual new business premiums showed particularly strong performance, growing 11.17% year-on-year to reach ₹1,66,591 crore. This highlights increasing consumer awareness about financial protection needs despite economic uncertainties.
The industry added 11.15 lakh new individual life insurance agents during FY25, resulting in a 7.88% expansion of the agent network. This growing distribution capacity supports further market penetration into underserved segments.
Regulatory Changes Impact Market Dynamics
Regulatory shifts played a significant role in shaping market performance. The Insurance Regulatory and Development Authority of India (IRDAI) implemented new surrender value guidelines effective October 2024, mandating higher payouts to policyholders surrendering policies before maturity.
This regulatory change prompted insurers to recalibrate product portfolios and agent commission structures. The adjustment period contributed to four consecutive months of negative premium growth through February before the March recovery.
Market volatility during the second half of FY25 also weighed on premium growth for several insurers, particularly affecting unit-linked insurance products. Consequently, the total number of new policies and schemes issued across the sector dropped by 7.39% to 27.06 crore for the full year.
Future Outlook Remains Cautiously Positive
Industry experts anticipate continued steady growth for the remainder of 2025, with projections ranging between 2-6% for premium expansion. Several factors support this outlook, including heightened consumer awareness of protection needs following pandemic experiences.
Market analysts expect private players to support their growth by imparting smart product offerings combined with digital distribution channels. Traditional players herein face the pressure to fast-track digital transformation initiatives to be able to confront the technology-based entrants.
Product innovation, therefore, remains fundamental to sustaining growth, but with increasing emphasis on simplified offerings, from addressing specific customer needs as opposed to complex products with a plethora of features. Demand will be exceptionally strong for term insurance and protection-oriented products compared with investment-oriented policies.
The life insurance sector now finds itself at an inflection point where aspirations on premium growth will have to contend with the other challenge of building a policy count and market penetration. Delivering on this will surely depend on governance relating to changing consumer preferences, alongside regulatory requirements and competitive pressure, in an increasingly vibrant marketplace.
