Daijiworld Media Network - New Delhi
New Delhi, Dec 22: Life insurance coverage in India has expanded dramatically over the past ten years, with the number of insured individuals rising from roughly 15 crore in FY15 to close to 40 crore in FY25, driven largely by the rapid spread of group and credit-linked insurance schemes, according to a new report released on Monday.
The surge reflects the broader momentum of India’s life insurance industry, which has grown at a compound annual rate of about 13 per cent over the last two decades, CareEdge Ratings noted. This growth has closely tracked the country’s economic expansion, with GDP at market prices increasing at an average pace of nearly 12.4 per cent during the same period.
Rising demand for group insurance products, ongoing product innovation, customised offerings, and stronger distribution channels—particularly in the individual insurance segment—have all contributed to the sector’s steady expansion.
However, despite the impressive increase in policyholders, India remains significantly underinsured when compared to global standards. Life insurance penetration stood at just 2.8 per cent in 2023, well below the average of around 5.6 per cent in developed markets. Insurance density was also modest at $70 per capita, underscoring the gap between India and its international peers.
The report cautioned that while coverage has widened, many policies carry relatively low sums assured, leaving major risks such as death protection and retirement income inadequately addressed. Although policy renewal rates improved in FY25, the long-term effectiveness of the sector will depend on providing meaningful financial protection and robust pension solutions, rather than merely expanding the number of insured individuals.
The industry also remains highly concentrated, with the top five life insurers accounting for more than 85 per cent of total premium collections. Life insurance continues to dominate India’s overall insurance market, contributing nearly 74 per cent of total premiums in FY25, compared with a global average of about 41 per cent. Total life insurance premiums during the year stood at Rs 8.85 lakh crore, the report added.