The Indian life insurance industry has achieved a compound annual growth rate (CAGR) of 12% in terms of new business premiums and 10.5% in annual premium equivalents from fiscal year 2019 to 2024, as reported by Asit C Mehta Investment Intermediates.
However, growth has slowed in FY 2024, attributed to regulatory changes, shifting consumer preferences, and increased returns from alternative investment funds, according to the “Thematic Report on India’s Life Insurance Sector.”
Despite this growth, the sector remains underpenetrated, with a life insurance penetration rate of 3.8%, significantly lower than the global average of 6.5%.
To bridge this gap, the Insurance Regulatory and Development Authority of India (IRDAI) has launched initiatives aimed at improving accessibility, including the ‘Insurance for All’ initiative targeted for 2047 and programs such as Bima Vistaar, Bima Vahak, and Bima Sugam.
Key factors propelling the industry’s expansion include rising per capita income, increased labor force participation, and a stronger emphasis on financial inclusion.
Looking ahead, Swiss Re projects that the Indian life insurance sector will grow at a real CAGR of 7.1% over the next five years, surpassing the emerging market average of 5.1% and the 1.7% growth anticipated in advanced economies.
The industry faced challenges in FY 2024 due to changes in the tax structure impacting non-participating and higher-premium products, along with rising commission costs and a shift towards market-linked products, which are favored for their potential for higher returns and tax benefits.
Related topics:
