After a tepid performance over the past two years, the life insurance industry recorded a 15.7 per cent year-on-year (YoY) growth in new business premium (NBP) in FY26, crossing the Rs 4 trillion mark for the first time. This growth was largely driven by the reduction in Goods and Services Tax (GST) on insurance products from 18 per cent to nil.
According to the Life Insurance Council, NBP rose to Rs 4.59 trillion in FY26 from Rs 3.97 trillion in FY25. In FY25, NBP of life insurers grew 5.7 per cent YoY, while in FY24 it grew 2 per cent YoY. In FY23, however, NBP saw robust growth of nearly 17 per cent YoY.
NBP is the premium earned from acquiring new policies.
During the year, the state-owned Life Insurance Corporation of India (LIC) reported a 14.9 per cent YoY increase in premium to Rs 2.60 trillion, up from Rs 2.27 trillion. Private life insurers recorded higher growth of 16.75 per cent YoY, with premiums rising to Rs 1.99 trillion from Rs 1.71 trillion.
Individual premiums grew by 10.8 per cent YoY to Rs 1.85 trillion, while group business premiums rose 19.24 per cent YoY to Rs 2.75 trillion.
In March, industry NBP rose 23.5 per cent YoY to Rs 75,872.3 crore. LIC reported a 17.35 per cent increase to Rs 43,310 crore, while private insurers saw premiums grow 32.73 per cent YoY to Rs 32,562.1 crore.
“Both LIC and private insurers delivered robust numbers, with LIC regaining momentum and private players posting even higher growth rates. The performance is likely driven by multiple supportive factors — including new product launches, favourable GST changes, and increased customer interest in locking in returns amid a lower interest rate environment. At the same time, part of this growth reflects normalisation after weaker previous years affected by regulatory changes,” said Saurabh Bhalerao, associate director, BFSI, CareEdge Ratings.
Over the past two years, the life insurance sector underwent significant regulatory changes that impacted growth. In FY24, premium growth was limited to 2 per cent YoY following the Union government’s removal of tax exemption on maturity proceeds of insurance policies — excluding ULIPs — with aggregate premiums exceeding Rs 5 lakh. This rule came into effect on April 1, 2023.
In FY25, changes introduced by the Insurance Regulatory and Development Authority of India (IRDAI) to surrender value norms, effective October 1, 2024, resulted in muted growth of 5.7 per cent YoY.
However, NBP growth normalised in FY26 after these regulatory adjustments.
Additionally, the Union government’s decision on September 22 to reduce GST on retail life and health insurance policies to zero from 18 per cent further supported industry growth.
Among private insurers, SBI Life Insurance reported a 19.6 per cent YoY increase in premium to Rs 35,576.7 crore. HDFC Life Insurance posted 8.54 per cent growth to Rs 36,646.4 crore, while ICICI Prudential Life Insurance recorded a 9.86 per cent rise to Rs 24,809.7 crore.
Bajaj Allianz Life Insurance saw premiums grow 18.7 per cent YoY to Rs 14,585.82 crore, and Axis Max Life Insurance reported a 19.12 per cent increase to Rs 14,501.25 crore.
The number of policies sold by the industry increased 4.7 per cent YoY to 28.33 million. LIC sold 18.5 million policies, up 3.63 per cent YoY, while private insurers recorded a 6.75 per cent YoY increase to 9.87 million policies.
“The performance of the life insurance industry this year has been strong and broadly healthy, with new business premium reaching around Rs 4.6 trillion, significantly supported by the GST cut, which made insurance products more affordable and boosted demand. Additionally, part of the improvement reflects normalisation following earlier regulatory and structural disruptions in the industry,” said Siddharth Rajpurohit, lead analyst at Systematix Group.