CareEdge forecasts 11% to 13% growth for India’s life insurers

Digital infrastructure is expected to enhance distribution channels.

The slower growth amongst India’s life insurers is attributed to factors like the new tax regime, flat group premiums, and the strong momentum experienced in March 2023, said CareEdge Ratings.

In fiscal year 2024 (FY’24), new business premiums of life insurers saw a modest 2.0% growth compared to 17.9% in FY23. 

Private insurance companies, though maintaining growth, have seen a subdued pace compared to the previous year, playing a role in counteracting the decline in LIC premiums.

Over the two years from FY’22 to FY’24, private companies have grown at a Compound Annual Growth Rate (CAGR) of 16%, contrasting with LIC's 5.8% growth and the industry's 9.7%.’

Despite challenges faced in FY24 due to regulatory initiatives, FY25 is expected to see a rebound in new business premiums on a lower base. 

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Total premium growth is anticipated to remain steady, with regulatory pressures easing. 

CareEdge forecasts a continued growth rate of 11% to 13% over the next three to five years. 

This growth will be driven by factors like prudent underwriting, high GDP growth, urbanisation, demand for protection plans, and initiatives to increase insurance coverage, especially in rural areas through programs like Bima Vaahak and Bima Sugam. 

Product innovation, customisation, and rising demand for retirement products due to an ageing population and low availability of government-sponsored social security mechanisms also contribute to growth prospects. 

Digital infrastructure is expected to enhance distribution channels.

However, challenges such as fraud, lapse ratio, macroeconomic changes, and regulatory uncertainties remain. Overall, the medium-term outlook for the life insurance industry is positive.