Resilience of Life Insurance Sector in India: FY 2024-25 Insights
The life insurance sector in India displayed significant resilience in fiscal year 2024-25, with renewal premiums constituting 55.09% of all premiums underwritten, as per the IRDAI Annual Report analyzed by the Insurance Awareness Committee – Life Insurance Council (IAC-LI). Total premium income for the industry grew to ₹8.86 lakh crore, marking a 6.73% increase from the previous year. This uptrend reflects the strong commitment from policyholders and underscores the enduring nature of life insurance products, which offer critical financial protection and promote disciplined financial planning.
During this period, life insurers disbursed benefits amounting to ₹6.30 lakh crore, equating to about 72% of net premiums collected. This payout highlights the sector's essential role in delivering financial support to policyholders and beneficiaries. The settlement ratios for individual and group death claims were impressive at 97.82% and 99.68%, respectively, underscoring the sector's focus on efficient claims management and policyholder servicing.
Mr. Kamlesh Rao, Chairperson of IAC-Life, emphasized the sustained importance of life insurance in fostering long-term financial well-being. A noteworthy growth was observed in Unit-Linked Insurance Plans (ULIPs), which increased from ₹7.61 lakh crore to ₹8.29 lakh crore, accounting for 12.23% of total investments managed by life insurers during the fiscal year. Despite these advancements, the life insurance penetration rate slightly declined to 2.7% of GDP, highlighting a challenge for the industry to extend financial coverage to a broader demographic.
The IAC-LI pointed out recent regulatory reforms by IRDAI aimed at enhancing transparency, disclosures, and policyholder protection measures, anticipated to boost consumer trust and long-term engagement with life insurance products. The Insurance Awareness Committee, founded in 2019 under the Life Insurance Council, consists of 24 life insurance firms dedicated to addressing the substantial protection gap in India. Efforts are geared towards increasing awareness and understanding of life insurance benefits, particularly among younger demographics aged 18-35, through comprehensive nationwide campaigns.