India’s insurance sector

India’s insurance sector continued its strong growth in 2024–25, retaining its position as the 10th largest insurance market globally with a 1.8% market share, as per the Swiss Re report. 

Key Facts 

• Insurance penetration: Premiums as a % of GDP → 3.7%
  • Life insurance: 2.7%
  • Non-life insurance: 1%
• Insurance density: Per capita premium → USD 97
• Insurance is increasingly becoming a key component of household financial assets (savings, investments, pensions).
• Share of insurance & pension funds in household assets rose from 28.6% (FY19) to 29.6% (FY25).

Key Features / Trends

• Life insurance dominates the sector:
  • ~91% of total Assets Under Management (AUM)
  • ~74% of total premium income
• Reflects:
  • Rising financial awareness
  • Increased risk coverage demand
• Growing importance of long-term savings instruments

Recent Policy & Regulatory Measures

• Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 amended:
  • Insurance Act, 1938
  • Life Insurance Corporation Act, 1956
  • Insurance Regulatory and Development Authority Act, 1999

Major Reforms:

• FDI limit increased from 74% → 100%
• Net Owned Fund (NOF) for foreign reinsurers reduced:
  • ₹5000 crore → ₹1000 crore
• GST exemption (from Sept 22, 2025) on:
  • Life insurance policies
  • Health insurance (including family floater)
  • Reinsurance

Impact:

• Lower premiums (removal of 18% GST)
• Increased affordability
• Higher insurance penetration
• No Claim Bonus (NCB):
  • Rewards policyholders for claim-free years
  • Encourages responsible usage

Source: PIB