After a difficult first half, remaining year may be better for life insurers

August 2025 saw the life insurance industry reporting very low growth.

- DEVANGSHU DATTA

The individual annual premium equivalent (APE) growth for private life insurers was just 1.3 per cent year-on-year (Y-o-Y). LIC saw a drop of 5.1 per cent Y-o-Y.

The number of individual policies sold in August declined 10.3 per cent, with 14 per cent fall seen in LIC and 2 per cent slump in the private sector.

The retail APE declined 0.6 per cent due to LIC's poor performance. For FY26 year-to-date (YTD), private insurers' market share for individual APE rose to 70.4 per cent, a gain of 216 basis points (bps) Y-o-Y.

The gains were highest for Axis Max (up 85 bps) and HDFC Life (up 74 bps).

Some buyers paused, waiting for goods and services tax (GST) cuts. The continued impact of new surrender regulations was also felt while floods may have impacted business.

The insurance market may be seeing a shift in share towards mid-sized insurers. August data suggests unit-linked insurance plans (Ulips), which had a high base, are being substituted by non-linked savings products.

As this substitution is playing out, it is resulting in higher value of new business (VNB) margin for insurers.