Life Insurance Premiums Cross Rs 8.7 Lakh Crore In FY25, Growth 5.2 Per Cent

India's insurance sector saw continued growth in financial year 2024–25, with life insurance premiums increasing by 5.20 per cent to Rs 8.70 lakh crore, according to the Financial Stability Report released in June 2025. This is up from Rs 8.30 lakh crore recorded the previous year.

The report said that new premium of life insurance companies also rose 5 per cent to Rs 4 lakh crore. Increased premium collections were largely due to greater awareness among policyholders, wider availability of insurance products, and measures undertaken by the insurance regulator towards greater transparency and consumer protection.

The health and overall insurance segment also saw an increase in overall premiums at 6.20 per cent to Rs 3.10 lakh crore. Of this, the health insurance segment saw the highest growth too, increasing 9 per cent from the previous year. The demand for health cover has been increasing steadily with a rise in the cost of healthcare and a shift in consumer behaviour in the post-pandemic world.

Health Insurance Drives Growth

Health insurance, including overseas medical cover, continued to be a strong growth driver for the insurance business in 2024–25. Demand was supported by increasing medical expenses, increase in middle-class populations, and wider product availability. More and more people opted for health insurance in urban as well as semi-urban areas, according to the report.

Medical insurance products typically provide outpatient care, critical illness, day-care, and family floater plans. These are coverages for different classes of policyholders with varying healthcare needs. According to the report, health insurance is playing a major role in increasing the overall insurance coverage in the country.

New Frameworks For Policyholder Protection

One of the most important initiatives during the year was the introduction of Bima-ASBA (Applications Supported by Blocked Amount). In this mechanism, funds are blocked in the customer's account upon application and debited only when a policy is issued. The funds are automatically released if the proposal is rejected.

The system offers higher transparency and protection to policyholders from issues, such as delay in refunds, unauthorised debit, or, denial of policies. The system is similar to the payment process already used in the case of mutual fund investments and public issues, so that the customer is well informed and not apprehensive about the process. The mechanism will most probably reflect a substantial improvement in trust and satisfaction levels among new policyholders.

Apart from this, the insurance regulator has also allowed insurers to hedge investment portfolios through equity derivatives. The move protects market value of equity holdings of the insurers and manages risks in the case of volatile market conditions. It is designed for the protection of long-run policyholder funds through portfolio stability over the cycle of business.

Digital Push And Stronger Regulations

The Insurance Regulatory and Development Authority of India (Irdai) has also introduced new norms that aim to further enhance the digital capabilities and governance approach of the industry. Insurers are now required to maintain all records electronically, supported by robust systems and sound data privacy controls. They are also mandated to adopt board-approved guidelines for handling data, investigation, and compliance.

The regulator has consolidated three most significant regulations, related to record-keeping, disclosure of confidential information, and investigations, into a single framework, making it simpler and less expensive.