India’s life insurance penetration declined for the third consecutive year even as the country’s overall insurance penetration remained unchanged at 3.7% in 2024–25, according to the latest annual report released by the Insurance Regulatory and Development Authority of India (Irdai).
As per Irdai’s FY2024–25 annual report, life insurance penetration fell to 2.7% of GDP in 2024–25 from 2.8% in the previous fiscal. Life insurance penetration stood at 3.2% of GDP in 2021–22 and has been on a steady downward trajectory since then, easing to 3% in 2022–23. The country’s overall insurance penetration, comprising both life and non-life segments, remained unchanged at 3.7% in 2024–25. Penetration in the non-life insurance segment, which includes health, motor, fire and other lines, also remained flat at 1% on a year-on-year basis in 2024–25.
Reform Catalyst
The data comes at a time when the government has enacted the Insurance Amendment Bill, 2025, which raises the foreign direct investment (FDI) limit in the insurance sector to 100% from the existing 74%. The move is expected to attract higher foreign capital inflows and bring in more players, aiding efforts to deepen insurance penetration across the country. In addition, the government has fully exempted goods and services tax (GST) on individual life and health insurance policies, a measure aimed at improving affordability and expanding coverage among a wider section of consumers.
Sectoral Breakdown
In terms of business performance, the total premium income of the life insurance industry rose 6.73% year-on-year to ₹8.86 lakh crore in FY25. Private sector life insurers reported a stronger growth of 12.07% in premium income to ₹3.97-lakh crore, while the sole public sector life insurer, Life Insurance Corporation of India, posted a modest growth of 2.75% to ₹4.89-lakh crore. The life insurance segment continued to dominate the industry’s product mix, accounting for 80.73% of total premium collections during the year. Pension and annuity products together contributed 18.87% to overall life insurance premiums.
On the non-life side, health insurance continued to be the largest segment in India’s non-life insurance industry in FY25, accounting for over 41% of the more than ₹3 lakh crore in total premium collected during the year. The gross direct premium income of the overall non-life insurance industry grew 6.19% year-on-year to ₹3.07 lakh crore in the previous fiscal. The health insurance segment recorded a 9.19% growth, retaining its position as the largest contributor to the non-life industry, with total premiums of ₹1.18 lakh crore.
Motor insurance remained the second-largest segment, registering an 8% year-on-year growth to ₹99,093 crore in FY25. The segment’s share in total non-life premiums edged up marginally to 32.21% from 31.68% in the previous year. Fire and marine insurance emerged as the next largest segments within the non-life industry, reporting premium incomes of ₹24,242 crore and ₹5,504 crore, respectively.