Private Insurers Stabilize as LIC Premiums Dip
Mumbai, India – The Indian life insurance sector experienced a year-on-year decrease of 3.5% in Annual Premium Equivalent (APE) for February 2025, according to recent data. This follows a substantial 25.8% increase in February 2024. However, private insurers stepped in to help offset the drop attributed to adjustments in Life Insurance Corporation (LIC) group single premiums.
The decline was driven by adjustments to the sum assured and commissions.
“Private life insurers were able to offset the drop in LIC for the month,” stated Saurabh Bhalerao, Associate Director at CareEdge Ratings, in a research note. The shift was largely influenced by adjustments to the sum assured and commission structures, prompted by revised surrender value guidelines that came into effect on October 1, 2024. Additional factors, including challenges in the bancassurance channel and increased competition in key markets, also contributed to the downward trend.
Sales of Individual Non-Single policies saw a decline of 23% in February 2025, with 18.4 lakh policies sold compared to the previous year. Despite this, the industry demonstrated a compound annual growth rate (CAGR) of 8.2% from February 2023 to February 2025. During the same period, private insurers achieved a strong growth rate of 15.3%, while LIC experienced a 2.2 percentage point decrease.
Sanjay Agarwal, Senior Director at CareEdge Ratings, noted the substantial market share held by the top four private insurers, accounting for nearly 30%. He also highlighted the increased focus on the agency channel, driven by banks’ focus on deposit gathering. “Meanwhile, the updated product and commission structure, resulting from the recently enacted new regulations concerning surrender values, has been causing volatile premium movements,” Agarwal explained.
The proposed Insurance Amendment Act is expected to further enhance market penetration by attracting new insurers to the market. CareEdge forecasts that the life insurance industry will continue to grow by between 11% and 13% over the next three to five years.
