India's life insurance APE dips 0.9% in January 2025

It was influenced by policy changes in sum assured and commissions.

India’s life insurance industry recorded a 0.9% year-on-year (YoY) decline in annual premium equivalent (APE) for January 2025, following a 25.2% growth in January 2024.

Private life insurers largely offset the drop in Life Insurance Corporation of India (LIC) premiums, which saw a decline in group single premiums.  

The slowdown was influenced by policy changes in sum assured and commissions under revised surrender value guidelines effective 1 October 2024, challenges in the bancassurance channel, and intensified competition, according to Saurabh Bhalerao, associate director at CareEdge Ratings.

The LIC continues to rely on the agency channel for over 90% of its individual new business premiums, whilst private insurers source more than 50% from bancassurance.  

Sales of Individual Non-Single policies fell 9.6% YoY to 24.3 lakh policies, mainly due to surrender value regulation changes. 

The industry's compound annual growth rate (CAGR) from January 2023 to January 2025 stood at 11.4%, with private insurers achieving 18.3%, whilst LIC remained mostly flat.  

CareEdge Ratings senior director Sanjay Agarwal noted that private insurers recorded an 18.7% YoY APE growth in January 2025, primarily driven by smaller firms. 

He expects insurers to shift focus toward the agency channel as banks prioritise deposit gathering and companies reduce reliance on bancassurance. 

Whilst new regulations on surrender values are causing short-term volatility, CareEdge anticipates industry growth of 11% to 13% over the next three to five years, aided by regulatory reforms under the proposed Insurance Amendment Act.