India’s life insurance industry recorded new business premiums of ₹41,117.1 crore in June, amid ongoing challenges from revised surrender value regulations, a drop in credit life sales, and lower group single premiums, according to a report by CareEdge Ratings.
Despite the current headwinds, CareEdge forecasts the life insurance sector to grow at a 10–12% rate over the next three to five years, driven by product innovation, supportive regulations, digitalisation, stronger distribution channels, and enhanced customer service.
In June 2025, the annual premium equivalent (APE) increased by 2.5%, representing a significant slowdown compared to the 20.0% growth observed during the same period last year. However, the sector posted a compound annual growth rate (CAGR) of 11.0% in APE between June 2023 and June 2025, with private insurers growing even faster at 15.4%, according to the report.
“The first quarter is typically a slow period for the life insurance sector, as it follows the fiscal year-end when most retail customers have already purchased policies in a last-minute rush,” said Saurabh Bhalerao, Associate Director, CareEdge Ratings.
For Q1 FY26, quarter-on-quarter premium growth reached 4.3%, compared to 22.9% growth in the same quarter a year ago. The muted performance is attributed to weaker consumer demand and the impact of new surrender value rules that came into effect on October 1, 2024.
Both LIC and private insurers reported growth in individual single and non-single premiums, indicating strong distribution channels and a shift toward higher-value policies, despite regulatory adjustments, Bhalerao added.
The growth in individual and yearly group business is expected to continue, with renewed focus on the agency channel due to banks’ emphasis on deposit mobilisation.
“Furthermore, the proposed Insurance Amendment Act aims to enhance market penetration by encouraging new companies to enter the market,” said Sanjay Agarwal, Senior Director, CareEdge Ratings.
Looking ahead, a gradual recovery is anticipated in FY26, supported by deeper regional outreach from private insurers and the upcoming rollout of the Bima Trinity initiative.
(With input from IANS)
