Life insurance premiums grew 2% in March 2025, signaling a potential shift in market sentiment
Although the Indian life insurance sector saw a meager increase of 2% YoY in new business premiums (NBP) in March 2025, with ₹61,439 crore as provisional data from the Life Insurance Council, the February dip raised questions about whether the growth was the beginning of an era of positive growth or merely temporary.
Performance Overview
The 2% uptrend in March stemmed solely from improved performance in group business segments as sales of individual policies have continued to experience pressure. During the month, group single premiums had ₹33,543 crore generation flat growth year-on-year, but remained the largest contributor to the industry’s collections in that section. Individual single premiums grew 13% YoY to ₹7,420 crores, reflecting some traction in one-time payment policies despite headwinds in volume growth for policies.
Fiscal Summary
For the financial year ending March 2025, the total business premium in the life insurance industry reflected a growth of 5.13% against ₹39.7 lakh crore in total business premiums for FY25, from the previous year’s ₹37.8 lakh crores in business premiums. Individual new business premiums grew by 11.17% to ₹1.66 lakh crore as against ₹1.49 lakh crore in FY24. Life Insurance Corporation of India (LIC), the biggest insurer in the country, collected ₹2.27 lakh crore in new business premiums for FY25, a rise of 1.86% compared to the previous fiscal. This includes an all-time high of ₹62,405 crore for individual new business.
However, the policy count of LIC suffered a massive 12.8% decline during the year, pointing to a lukewarm retail interest. Private insurers, on the other hand, reflect strong momentum. The total NBP of India’s private life insurers grew at 9.8% y-o-y to take to ₹1.71 lakh crore in FY25. ICICI Prudential Life Insurance grew student premiums by nearly doubling its group yearly renewable premiums, posting a buoyant 24.9% rise. Tata AIA Life Insurance also experienced broad-based growth across all segments, ending the year with collections amounting to ₹10,321 crore in premiums, up 16%.
Growth Factors
There are several factors behind the modest growth in March and FY25:
Regulatory Changes: Due to the introduction of new surrender value norms on or from October 1, 2024, life insurers would be liable to payout more to a policyholder surrendering their policy before maturity. Hence, life insurers had to redesign their portfolios while recalibrating commissions to agents so as not to be adverse with the new rules.
Market Volatility: Nearly half of the demand for unit-linked insurance plans to boost life insurance premiums has remained quite low due to the continuing volatility in the markets.
Digitization and Distribution Expansion: Along with the expansion to the insurance of access in the industry, added over 11.15 lakh new individual life insurance agents in FY25, which counted an increase of 7.88% overall. Rapid digitization across the sector is further expected to drive insurance penetration .
Emerging Trends and Outlook
The modest growth in March 2025, following several months of negative NBP growth, suggests a potential stabilization in the life insurance sector. However, the overall premium increase was accompanied by a 7.39% drop in the total number of new policies and schemes issued across the sector, indicating that while premium collections improved, policy volumes declined .
continue to outpace LIC in terms of growth momentum, leveraging digital channels and diversified product offerings to attract a broader customer base. The focus on encouraging first-time buyers to secure comprehensive financial protection has resulted in a 4.47% growth in combined individual premium collections for March 2025 and an 11.17% year-to-date increase .
The 2% growth in life insurance premiums in March 2025 marks a positive development following a period of sluggish performance. While it is premature to declare this as the onset of a new growth trend, the factors contributing to this uptick—such as regulatory adjustments, market stabilization, and strategic initiatives by insurers—indicate a cautiously optimistic outlook for the sector. Continued focus on digital transformation, product innovation, and customer engagement will be crucial in sustaining and accelerating this growth trajectory in the coming months.
