India’s life insurance industry sees 20.2% YoY APE growth in June

CareEdge foresees medium-term outlook to remain positive.

The life insurance industry in India reported a 20.2% year-on-year (YoY) Annual Premium Equivalent (APE) growth in June 2024, driven by increased policy volumes and a low base effect from June 2023, data from the Life Insurance Council (LIC) showed.

Individual policy numbers grew by 12.4% YoY in May 2024. LIC saw a significant APE growth of 20.8% in June 2024, up from 0.4% in June 2023, largely due to group premiums. 

The industry’s two-year (June 2022 to June 2024) CAGR was 14.3%, with private players at 17.8% and LIC at 10.2%.

Ratings agency, CareEdge said the growth in the first quarter of fiscal year 2025 (FY 2025) was fueled by increased insurance coverage, single premiums, and a lower base effect. 

Factors driving growth include prudent underwriting, high GDP growth, urbanisation, demand for protection plans, younger demographics, rural insurance initiatives, product innovations, and rising retirement planning awareness.

Digital infrastructure also boosted multiple distribution channels. Q1 FY 2025 is expected to show strong results despite lower margins due to a shift to ULIPs. 

CareEdge anticipates an 11% to 13% growth rate for the industry over the next three to five years, with a focus on the agency channel to reduce reliance on bancassurance. 

Challenges include regulatory changes affecting product mix and commission structures, fraud and lapse ratio concerns, and potential adverse macroeconomic conditions. Despite these, the medium-term outlook remains positive.