India’s life insurance sector experienced a 3.5% year-on-year drop in Annual Premium Equivalent (APE) for February 2025, following a significant 25.8% growth in the same month the previous year.
Saurabh Bhalerao, Associate Director at CareEdge Ratings, stated in a research note that private insurers helped counterbalance the decline in Life Insurance Corporation (LIC) premiums, particularly due to a reduction in group single premiums.
The downturn was primarily attributed to changes in sum assured values and commission structures, prompted by new surrender value regulations that came into effect on October 1, 2024. Additional challenges included difficulties in the bancassurance channel and increased competition in key market areas.
Sales of individual non-single policies saw a sharp 23% drop in February 2025, with only 18.4 lakh policies sold, compared to the previous year.
Despite the short-term decline, the industry’s compound annual growth rate (CAGR) between February 2023 and February 2025 remained robust at 8.2%. Private insurers posted a 15.3% growth, while LIC experienced a 2.2% drop.
Sanjay Agarwal, Senior Director at CareEdge Ratings, highlighted that the top four private insurers now control nearly 30% of the market. He also pointed out that banks’ greater emphasis on deposit collection has led insurers to increase their focus on the agency channel.
Agarwal added, “The updated product and commission structure, stemming from recent changes in surrender value regulations, has resulted in fluctuations in premium volumes.”
Looking ahead, the proposed Insurance Amendment Act is expected to boost market penetration by attracting more insurers, with CareEdge forecasting that the life insurance industry will grow by 11% to 13% over the next three to five years.
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