Maturing Indian Life Insurance sector in Individual Non single premium policies-Towards a better Insurance Coverage at cheaper cost.

     

Assessing progress towards "Insurance for all by 2047" in the life insurance sector requires evaluating not only the number of policies sold, but also the evolution of risk cover (Sum Assured) and the cost of insurance. This analysis focuses on individual non-single premium policies, as Individual  single premium policies, often annuities , do not accurately reflect risk coverage trends.This is a study further to my previous study (Linked in-Beyond Policy Count:Analysing the growing sum assured  and declining Premium rates in Indian life insurance-https://lnkd.in/dKpYTH2y ) to get a confirmation of trend observed before.

Examination of data across different timeframes, specifically comparing FY 2018-2019 with FY 2024-2025, and integrating recent quarterly data (Upto 30 June 2022 and Upto 30 June 2025), reveals a significant and consistent shift in the individual non-single premium life insurance landscape. While there has been an overall decrease in policy volume when comparing the full financial years, the sector consistently demonstrates a clear move towards higher-value and higher-coverage policies with lower insurance costs, indicating market maturation and evolving consumer preferences.

Key Observations and Potential Drivers:

1. Increased Total Sum Assured and Doubled Average Sum Assured per Policy:

  • Long-Term Trend (FY 2018-2019 to FY 2024-2025):
    • Total Sum Assured rose significantly from ₹1,714,213.43 Crores to ₹3,418,091 Crores, representing a substantial increase of approximately 99.40%.
    • Average Sum Assured per policy more than doubled, from ₹6.28 Lakhs to ₹13.03 Lakhs, indicating a dramatic increase in the average coverage sought by individuals.
  • Recent Quarterly Data (Upto 30 June 2022 to Upto 30 June 2025):
    • Total Sum Assured continued its upward trajectory, increasing from ₹400525.75 Crores to ₹723017 Crores (an 80.51% growth).
    • The Average Sum Assured per policy saw an even more dramatic rise, from ₹809673.72 (approx. ₹8.10 Lakhs) to ₹1583753 (approx. ₹15.84 Lakhs), a staggering increase of approximately 95.60% in just three years. This recent quarterly data strongly reinforces the long-term trend of consumers opting for significantly higher coverage.
  • Possible Reasons: Increased insurance awareness, rising income levels, a shift towards protection-oriented plans (especially term insurance), aggressive marketing of high-value policies, and targeting of upper-middle-class demographics who are increasingly seeking robust financial protection. The quarterly data suggests that this trend has accelerated recently.

2. Decreased Policy Count (Overall FY Trend with Quarterly Nuance):

  • Long-Term Trend (FY 2018-2019 to FY 2024-2025): The previous article highlighted an overall decrease in policy volume when comparing these full financial years. This suggests that while total Sum Assured is growing, the number of individual transactions might be consolidating.
  • Recent Quarterly Data (Upto 30 June 2022 to Upto 30 June 2025): This period also shows a decrease in the number of policies, from 4,946,755 to 4,565,212, a decline of approximately 7.69%. This consistent quarterly decline further supports the notion that the growth in SA and FYPI is not driven by an increased number of policies, but by the increased value per policy.
  • Possible Reasons: This counter-intuitive trend (fewer policies but higher total SA) reinforces a strategic shift by insurers towards higher-value clients or products. It could also indicate increased digital adoption leading to fewer, but larger, direct sales, or a general market maturation where repeat buyers are opting for enhanced coverage rather than multiple small policies.

3. Decreased Premium Per ₹1000 Sum Assured (Cost of Life Insurance):

  • Long-Term Trend (FY 2018-2019 to FY 2024-2025): The cost of life insurance significantly decreased from ₹38.51 in FY 2018-2019 to ₹33.71 in FY 2024-2025 per ₹1000 of life insurance cover. This represents a reduction of approximately 12.5% over six years, making insurance more affordable per unit of coverage.
  • Recent Quarterly Data (Upto 30 June 2022 to Upto 30 June 2025): This positive trend is strongly amplified in the recent quarterly data, where the premium per ₹1000 Sum Assured saw a more dramatic decrease from ₹41.61 to ₹29.57. This is a substantial reduction of approximately 29.04% in just three years, demonstrating an accelerated trend towards lower costs.
  • Possible Reasons: Improved mortality experiences (people living longer), enhanced rule-based underwriting engines (leading to more accurate risk assessment), more innovative and competitive product offerings (especially term insurance which has lower premiums), utilization of cost-effective add-on riders for increased risk coverage, a shift towards younger buyers (who typically incur lower premiums), and increased competition among insurers. The accelerated decline in cost in the latest quarterly data suggests these factors are intensifying.

Conclusion:

The cumulative data, from the long-term financial year comparison to the recent quarterly trends, unequivocally indicates a transformative period for the individual non-single premium life insurance sector in India. Despite a reduction in the number of new policies issued, there is a substantial and accelerating increase in both the value (First Year Premium Income) and coverage (Sum Assured and Average Sum Assured per Policy) provided by each policy. Crucially, this enhanced coverage is coming at a significantly lower cost per unit of sum assured.

This consistent trend suggests a maturing market where consumers are becoming more financially astute, prioritizing comprehensive protection rather than just owning a policy, and actively benefiting from more competitive pricing or efficient product offerings from insurers. The industry's focus appears to have strategically shifted from merely increasing policy volume to ensuring adequate financial protection for individuals, reflecting a positive evolution in both consumer behavior and industry strategy towards the "Insurance for all by 2047" objective, primarily by delivering greater coverage value at a reduced cost. While policy reach (number of policies) might need further attention to achieve "insurance for all," the progress in coverage adequacy and affordability is significant.

Disclaimer:This are my interpretation of data is compiled from IRDAI site.It does not in any way reflect the views of any organisation with which I  am or was associated with.

#LifeInsurance  #FinancialLiteracy #Insurance #InsuranceTrends #AshwaniSpeak #AshwaniNexus

Comments

  1. H S B Sinha14 July 2025 at 00:14

    Very nicely explained that too in a very simple language 👍

    ReplyDelete
  2. Rajiv14 July 2025 at 10:50

    Excellent analysis. Now Corporates need to understand the mood of the Customers and devise Marketing strategies around it.

    ReplyDelete
  3. devojit sanyal14 July 2025 at 11:18

    Sir, well explained. This is an excellent analysis and will certainly help us in devising our future marketing strategies.

    ReplyDelete
  4. Suparno Chakrabarti14 July 2025 at 18:14

    Agreed to the view point expressed in the article. Additionally I add that there is certain shift from saving-based Endowment non-linked non-single type of products to Pure-risk-based products among millennials. This gives clear leg-room for them to invest elsewhere including in Mutual Funds and / or in Equity Markets. The Millennials needs to spend lot in EMIs for various targets including housing, travelling, or purchasing cars/bikes, etc. The shift may be to explore new opportunities or new way of fiscal management.

    ReplyDelete
  5. SHARAD SRIVASTAVA14 July 2025 at 19:23

    Very useful sir

    ReplyDelete
  6. Anil Raj14 July 2025 at 23:04

    Nicely explained.
    I feel that growing economy like India must devise ways and means to penetrate more n more into rural population. More effective ways of doing it, might be combining micro lending with micro insurance involving groups.

    ReplyDelete
  7. Nagaraja Rao Parakala15 July 2025 at 06:57

    Good analysis Ashwini. Maturing market throws open new opportunities. It is for the industry to utilise and grow taking fresh initiatives. Growth can be horizontal as well as vertical. Industry can address that.

    ReplyDelete
  8. Indraneel15 July 2025 at 08:51

    Great Analysis Sir... and explained very nicely...

    ReplyDelete
  9. Vikas Nagrath15 July 2025 at 11:05

    Role of insurance companies, social media, and well trained professionals in insurance have played a great role in changing the mind set of policyholders at large ; They now understand the need for insurance as per their income . Honestly speaking ,one advertisement of LIC in which the Gentleman photo is shown who has passed untimely and his wife is getting her daughter’s wedding organised all with the help of the insurance claim on the life of her husband, was a eye opener ,going for the right kind and right amount of of insurance . Trust me the HNI mindset changed 360 degrees

    ReplyDelete
  10. PRATAP CHANDRA SAHOO15 July 2025 at 13:11

    Excellent Article

    ReplyDelete
  11. Navin Sinha15 July 2025 at 13:36

    A well structured and lucid analysis of recent trends in Individual NSP segment. As indicated in the first line of blog this exercise is for "Assessing progress towards Insurance for All by 2047"(THE GOAL). Are the trends which have been very logically brought out in the blog are indicative of progress towards the Goal or away from it? Avg SA per Policy is increasing at a tremendous rate . Although Premium per 1000SA is declining but due to disproportionate increase in avg SA / Pol the Avg Premium / policy (Tkt Size of policy) is also showing hefty increase.
    Will this trend lead to achievement of " THE GOAL" ? Obviously not. Because trend is not towards providing insurance cover to the bottom of population pyramid , BUT away from it. Can we achieve the goal by ignoring this population segment?
    For analysing how far we are from the Goal we should also include Group Insurance policies specially social security schemes like PMJJBY, PMSBY and other Government sponsored schemes.(Whether these are adequate ???)
    In my view Insurance Industry has to find a PROFITABLE way of addressing Insurance/ Financial needs of low income population who live on day to day earning. How it can be done------ some other time.

    ReplyDelete
  12. T S Vijayan15 July 2025 at 16:39

    Article does justice to the subject. However my doubt is about a phrase quoted in the article ; "insurance for all". Does it mean the entire population, just like Banking for all ? If so I would call the person who coined the phrase as illiterate on the subject of insurance .

    ReplyDelete
  13. Nityananda Bose15 July 2025 at 22:08

    Mainly ULIP and Term products are the contributing factors for the growth average SA for the industry as a whole .Thanks Sir for the insightful article.

    ReplyDelete

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