India’s Life Insurance Sector Sees Moderate Growth in FY 2025
India’s life insurance industry reported a 5.1% year-on-year growth in New Business Premiums (NBP) for the fiscal year ending March 2025, reaching Rs 3.97 lakh crore. This growth was primarily driven by private sector insurers, while the Life Insurance Corporation of India (LIC) saw a decline in key segments.
The Annual Premium Equivalent (APE) grew 4.5% YoY in March 2025, reversing a 4.1% YoY decline in the same month the previous year. From FY 2023 to FY 2025, the industry recorded a compound annual growth rate (CAGR) of 6.8%, with private players leading at a 12.7% CAGR, while LIC registered a 2% decline.
Saurabh Bhalerao, associate director at CareEdge Ratings, noted that the industry’s 5.1% growth in FY 2025 compares with 2.0% in FY 2024 and 12% growth in FY 2023. Private insurers largely offset the decline in LIC’s group business. The revised commission framework has prompted insurers to increase their focus on the agency channel.
The growth figures reflect adjustments in sum assured and commission structures following the implementation of revised surrender value guidelines on 1 October 2024. These regulatory changes, combined with intensifying market competition, led to volatility across product categories in the latter half of the financial year.
Looking ahead, premium growth is expected to remain volatile in the short term, with a recovery anticipated in FY 2026 as regulatory changes begin to benefit consumers. The proposed Insurance Amendment Act is expected to support market expansion by encouraging new entrants, while private insurers are likely to drive growth through broader geographic coverage and initiatives like the Bima Trinity.
