NEW DELHI– The number of Indians covered by life insurance has risen sharply over the past decade, increasing from about 150 million in FY15 to nearly 400 million in FY25, driven mainly by the rapid expansion of group and credit-linked insurance products, according to a new report released Monday.
The report said the growth reflects the steady expansion of India’s life insurance sector, which has recorded a compound annual growth rate of around 13 percent over the past 20 years.
The sector’s expansion has broadly tracked India’s economic growth, with GDP at market prices growing at an average rate of about 12.4 percent during the same period.
Rising demand for group insurance, continued product innovation, more personalized offerings, and stronger distribution networks—particularly in individual insurance—have supported the sector’s growth, the report said.
Despite the increase in coverage, India remains an underpenetrated insurance market. Life insurance penetration stood at just 2.8 percent in 2023, well below the average of around 5.6 percent seen in developed economies.
Insurance density also remained low at $70 in 2023, highlighting the significant gap between India and global peers.
The report cautioned that while more people are now insured, many policies continue to offer relatively low sums assured. As a result, critical risks such as death protection and retirement income are not adequately covered for a large portion of policyholders.
Although policy renewal rates improved in FY25, the report said the long-term impact of the sector will depend on providing meaningful protection and reliable pension products, rather than focusing solely on increasing the number of insured individuals.
The market remains highly concentrated, with the top five insurers accounting for more than 85 percent of total premium income.
Life insurance continues to dominate India’s insurance industry, contributing nearly 74 percent of total premiums in FY25, compared with a global average of about 41 percent. Total life insurance premiums reached Rs 8.85 lakh crore during the year, the report added. (Source: IANS)
