Life Insurance Penetration Further Falls To 2.7% in FY25: IRDAI Annual Report
The penetration with respect to the non-life insurance industry remained flat at one per cent during 2024-25 as in 2023-24
Mumbai: India has continued to report a dip for the third consecutive year in life insurance penetration which has declined to 2.7 per cent during 2024-25 from 2.8 per cent in the previous year according to the annual report of Insurance Regulatory and Development Authority of India(IRDAI) released on Tuesday. The fall comes despite a 7 per cent increase in premium collections by life insurers to Rs 8.86 lakh crore for 2024-25.
The penetration with respect to the non-life insurance industry remained flat at one per cent during 2024-25 as in 2023-24. The overall insurance penetration (life and non-life) remained flat at 3.7 per cent as in 2023-24. Insurance penetration in India had peaked at 4.2 per cent during the pandemic in 2021-22 but has since declined.
Insurance penetration and density are two metrics often used to assess the level of development of the insurance sector in a country. While insurance penetration is measured as the percentage of insurance premiums to GDP, insurance density is calculated as the ratio of premium to population (per capita premium).
In 2024-25, the insurance density in India showed a modest rise, increasing from $ 95 in 2023-24 to $ 97 in 2024-25. Specifically, life insurance density increased from $ 70 to $ 72, while non-life insurance density remained stable at $ 25. This upward trend in insurance density has been consistent since 2016-17.
As per Swiss Re Sigma World Insurance Report, globally insurance penetration and density were 3 per cent and $ 388 for the life segment and 4.3 per cent and $ 555 for the non-life segment. overall, insurance penetration and density were 7.3 per cent and USD 943 respectively in 2024.
The Swiss Re Report pointed out that India remained the 10th largest insurance market in the world by nominal premium volumes in 2024, with a global market share of 1.8 per cent. Since 2023, several measures have been introduced to address insurers’ profitability concerns and the subsidy burden on state governments, which may likely increase penetration though a period of adjustment to new provisions. Swiss Reforecasts that life premiums in India will grow below trend at 3.5 per cent in 2025 against the 2014–23 CAGR of 4.9 per cent, as the market adapts to changes in taxation, expenses and surrender norms, before recovering to 5.7 per cent in 2026.
