India's life insurance sector slows in FY24 after a robust FY23

Policy purchases in March 2023 ahead of budgetary changes subdued FY24.

After robust growth in 2023 (FY23), first-year life insurance premiums in 2024 (FY24) showed subdued movement overall. Year-to-date, new business premiums narrowed their decline to 7.0%, improving from the 12.7% fall reported the previous month but still lower than the 31.2% growth in the same period in FY23.

According to a CareEdge report, year-on-year decrease is attributed to a substantial reduction in group premiums, the introduction of a new tax regime, and the exceptional momentum in March 2023. 

Private insurance companies have sustained growth, offsetting the dip in LIC premiums, but their pace is comparatively slower than the previous year. Larger private companies outperformed their smaller counterparts.

However, there was a notable increase of 43.8% in December 2023 compared to a 9.7% rise in the same period last year. This surge is linked to group single premiums, particularly from LIC, and modest growth in the private sector.

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In FY23, life insurance companies experienced significant top-line growth, driven by factors like the absence of COVID-related constraints, an increase in the non-participating segment in the last quarter of FY23, and a rise in term policies. 

Despite a slowdown in the beginning of FY24 due to policy purchases in March 2023 ahead of budgetary changes, the industry is strategically adjusting its policy portfolio for measured growth. 

The overall growth potential in the life insurance segment remains robust, driven by factors like the existing protection gap, a supportive regulatory framework (“Insurance for all" by 2047), and the ongoing need for insurance provisions.