India’s life insurance sector is poised for a period of healthy growth over the next three years, according to a recent research report by Centrum Broking. The brokerage forecasts that private life insurers will achieve an annualised premium equivalent (APE) compound annual growth rate (CAGR) of 13-18% between fiscal years 2026 and 2029.
The growth trajectory is largely supported by rising demand for protection products, alongside increased traction in annuity and non-participating savings policies. Data from the second quarter of the 2027 fiscal year indicates APE growth ranging from 7% to 16% across insurers, while gross premium growth for private firms stood between 8% and 16% year-on-year. The industry is currently pivoting away from unit-linked insurance plans (ULIPs) to mitigate risks associated with market volatility, focusing instead on products that offer more stable margins.
Profitability, measured by the value of new business (VNB) margins, has shown positive momentum. During the first half of the 2027 fiscal year, VNB margins for private insurers expanded by 10-170 basis points year-on-year. Life Insurance Corporation of India (LIC) also reported a significant improvement, with its VNB margin expanding by 470 basis points to reach 22.3%.
Despite these gains, the sector faces lingering operational hurdles. Expense ratios rose across several private insurers in the second quarter of fiscal year 2027 due to higher operating costs. Furthermore, persistency trends—which track the proportion of policies that remain active—have been mixed, with most insurers recording a decline in 13-month persistency.
Key facts
- Private life insurers anticipate a 13-18% APE CAGR from FY26 through FY29.
- During Q2 FY27, private insurers saw gross premium growth between 8% and 16% year-on-year.
- VNB margins for private insurers increased by 10-170 basis points during the first half of FY27.
- LIC recorded a 470-basis-point expansion in VNB margins to 22.3% during H1 FY27.
- Most insurers reported a decline in 13-month policy persistency rates.
Why it matters
Sustained growth in the coming years will depend on the continued expansion of distribution networks and the successful implementation of protection and annuity offerings. While insurers have expressed confidence regarding their compliance with proposed regulatory norms, the industry awaits further clarity following the release of final regulations.
Source: Times of India, Economic Times
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