With a surge in both life and non-life insurance in FY24, India is poised to become the fastest-growing market among G20 nations for the next five years, according to the Economic Survey, 2025.
The life insurance industry recorded premium income of Rs 8.3 lakh crore in FY24, a year-on-year (YoY) growth of 6.1 percent from Rs 7.8 lakh crore in FY23, as noted in the survey. The growth was driven by a mix of renewal premiums, which constituted 54.4 percent of the total, and new business, which contributed the remaining 45.6 percent.
Life insurers paid out benefits amounting to Rs 5.8 lakh crore, with Rs 42,284 crore specifically allocated for death claims.
The survey highlighted that the non-life segment, particularly health and motor insurance, saw net incurred claims amounting to Rs 1.72 lakh crore in FY24.
The Swiss Re Institute, as quoted in the survey, has forecast 11.1 percent growth for India's insurance sector from 2024 to 2028, attributing this to an expanding middle class, technological advancements, and supportive regulatory frameworks.
This growth is further underlined by a noticeable shift in the life insurance sector towards protection and guaranteed return products, which now cover 40 percent of households, largely due to the extensive network of the Life Insurance Corporation of India (LIC), according to the survey.
However, despite these achievements, India's insurance penetration remains a mere 3.7 percent, significantly below the global average of 7 percent, as per the Economic Survey 2025, indicating substantial untapped market potential.
Insurers are now focusing on expanding into less penetrated markets like tier 2 and 3 cities and rural areas, leveraging innovative distribution models to address customers who are currently underinsured or only covered by government schemes, according to the survey.
The survey also shed light on challenges faced by the sector, including evolving customer expectations and emerging risks such as climate change and geopolitical instability.
An ageing population, increasing life expectancy, and the resultant risks also highlight the widening insurance gap.
Further, non-financial risks, including cybersecurity threats and AI-related issues, have become as critical as traditional financial risks, according to the survey.
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