India’s Life Insurance Sector Poised for Growth Amid Favorable Economic and Policy Tailwinds

Centrum Broking Highlights Increased Market Share of Private Insurers, Rising Financial Inclusion, and Policy Reforms as Key Growth Drivers

New Delhi, January 7: The Indian life insurance sector is at an “inflexion point” and is set for robust growth driven by rising financial inclusion, increasing per capita income, favorable demographics, and supportive policy measures, according to a recent report by Centrum Broking.

The report emphasized that India’s ambitious goal of achieving ‘Insurance for All’ by 2047 is being actively supported by the Insurance Regulatory and Development Authority of India (IRDAI) and ongoing government initiatives.

Private Players Leading Market Expansion

Private life insurance companies have steadily increased their market share in individual Annual Premium Equivalent (APE), rising from 56% in FY18 to 68% by Q2 FY25. State-owned Life Insurance Corporation of India (LIC) has maintained a 32% market share over recent quarters. Major private players like SBI Life and HDFC Life have shown consistent growth, with listed private insurers now holding a 60% market share within their sector.

Financial Inclusion Boosting Insurance Penetration

Over 80% of Indian adults now have formal financial accounts, a sharp increase from approximately 50% in the early 2010s. This surge in financial inclusion, combined with increased awareness and policy support, has significantly contributed to insurance sector growth.

Role of Bancassurance

Bancassurance—where banks partner with insurance companies to distribute insurance products—has become a critical driver for insurance penetration, especially among private insurers. LIC has also begun emphasizing bank partnerships to expand its distribution network.

Government Initiatives and Policy Reforms

In November 2024, the Indian government proposed several reforms to accelerate sector growth:

• Increasing the FDI limit in insurance companies from 74% to 100%.
• Allowing insurers to undertake multiple classes of insurance business.
• Amendments aimed at improving affordability and accessibility of insurance products.

The Road Ahead

Despite significant progress, a large portion of India’s population and insurable assets remain underinsured, leading to financial vulnerabilities and increased public expenditure. Centrum’s report emphasizes that sustained policy support, technological adoption, and innovative distribution channels will play a crucial role in achieving the vision of ‘Insurance for All’ by 2047.

With rising financial awareness, favorable demographic trends, and ongoing regulatory improvements, the Indian life insurance industry is well-positioned to experience transformational growth in the coming years.