Life Insurance Premiums Fall 8 Per Cent In January; Fewer Policies Issued As LIC Struggles, Private Insurers Hold Firm

The latest provisional data by the Life Insurance Council shows that new business premiums (NBP) of major life insurers fell by 8 per cent year-on-year (Y-O-Y) in January 2025. The NBP fell from Rs Rs 33,559.75 crore to Rs 30,825.17 crore last month.

This decline is also visible in the number of policies issued which raises concerns about consumer sentiment when it comes to purchasing insurance as a financial safety tool.

The Number Story

Over the first 10 months of the financial year 2025, the industry still managed an 8 per cent growth in total premiums compared to last year. But January’s decline has raised concerns - why are fewer people buying life insurance and how have the companies fared?

Among major life insurers, Life Insurance Corporation (LIC) took the hardest hit with a 14 per cent decline in January premiums. The annual premium equivalent (APE) of LIC dropped around 27 per cent while its retail APE dipped 7 per cent which could be a sign of the new business slowing down.

Its total premium collections for last month fell from Rs 18,920.77 crore to Rs 16,292.67 crore from the year-ago period. This further showed a decline from December 2024 collection which was parked at Rs 13,523.87 crore.

The private insurers on the other hand have fared much better wherein their overall January premiums slipped marginally by 1 per cent Y-O-Y. Their total premium collections for the first 10 months of FY25 grew by 12 per cent.

For instance, ICICI Prudential witnessed a 14 per cent rise in January premiums and a 29 per cent increase in total premiums for the fiscal year so far. Axis Max Life on the other hand saw a steady 9 per cent Y-O-Y uptake in premiums last month and a 15 per cent gain over the 10-month period.

PNB MetLife witnessed a significant surge, with the highest individual single premium collections in January increasing by 1009.77 per cent to Rs 101.02 crore from just Rs 7.49 crore last year.

HDFC Life also followed suit, posting a 25 per cent YoY rise in premiums and a 13 per cent increase for the last 10-month period. Its total APE increased 27 per cent YoY, while retail APE rose 25 per cent.

SBI Life collected Rs 3,275.26 crore in total premiums last month, though this still showed a 5.41 per cent decline from the previous year.

For private insurers, it seems that individual policy sales have been holding up despite an overall slump.

The life insurance industry in general has not been faring well. According to the annual report by the Insurance Regulatory Development Authority of India (Irdai), the insurance penetration for the Life Insurance industry marginally declined to 2.8 per cent during 2023-24 from 3 per cent in the previous year.

Speaking on this downward trend at Outlook Money’s 40 After 40 Retirement Planning Expo, Sumit Madan, Senior Director, and Chief Distribution Officer at Axis Max Life Insurance, listed several factors that could be driving such a decline.

According to Madan, lack of awareness and perception bias are two major reasons why people still don’t see life insurance as a primary financial product. Additionally, he opined that though India is one of the ‘most affordable countries’ when it comes to life insurance, the cost of insurance including GST on premiums makes it seem expensive.