Life Insurance: Protecting 1.4 Billion People in India

India's life insurance market is one of the fastest growing in the world. With a population of over 1.4 billion and a flourishing middle class, the growth potential is immense. Additionally, the average annual real gross domestic product (GDP) is expected to grow 6.4 percent between 2024 and 2028, placing India’s projected GDP growth ahead of other major emerging Asian economies such as China and Indonesia.

The life insurance market in India is experiencing a surge in demand, as well, and is projected to grow at a compound annual growth rate (CAGR) of 10 percent from $151.7B in 2024 to $216.1B in 2028, in terms of gross written premiums (GWPs). Fueling this surge is increased awareness of the need for financial security, robust economic growth, digitization, streamlined access via digitization, innovative technology (InsurTech firms) and significant regulatory support.

Three key factors that will continue to influence growth in the Indian insurance market within the next 18 to 24 months:

1. Regulatory Support

The Insurance Regulatory and Development Authority of India (IRDAI) has played a pivotal role in fostering a competitive and robust insurance market. The “Insurance for All by 2047” initiative, launched by IRDAI in November 2022, is expected to support the development and expansion of the insurance sector. Seeking to make a measurable improvement in the life insurance penetration rate from about 3 percent, the initiative outlines an ambitious mission to enable every Indian citizen access to appropriate life insurance coverage by providing citizens with affordability, choice of insurance products and ease of procurement. The IRDAI is continuously introducing improvements that are aimed at protecting policyholders and promoting market efficiency. Expectedly, the simplification of policy documents and ensuring frictionless claims processes will also be top priorities. These types of activities will help boost customer participation and increase access. Future regulatory guidelines can be expected to focus on digital policies, data privacy and protection, cybersecurity and artificial intelligence (AI) across the insurance value chain.

2. Technology — AI Disrupting Digitization

As is true across the world, AI is poised to disrupt the digitization activities that were already underway within our industry. Even before AI became the dominant technological driver across the industry, the Indian insurance industry was capitalizing on the technological might of the country to fundamentally transform the value chain. Embracing a mobile-first to mobile-only mindset, carriers have been successfully employing technology to streamline their operations, realize cost savings, increase operational efficiencies and deliver frictionless experiences to customers, while expanding coverage and access in underserved communities.

According to recent data, it is estimated that, as of the outset of 2024, there are 1.12 billion active mobile connections in India, translating to roughly 78 percent of the total population having access to a smartphone. As is the case with several Asian countries, India seems to have skipped the laptop generation, going directly from a desktop-dominated computing ecosystem to a smartphone-dominated technology ecosystem.

Shifting age demographics and a digital generation of consumers are at the forefront of driving carriers to embrace digitization. According to recent data, nearly 70 percent of India’s population was between the ages of 15 and 64 in 2020. With over 600 million people between 18 and 35 years old, the country had the largest number of Millennials and Gen Zs globally.

Digital platforms and mobile applications are simplifying the process of buying insurance, making it more accessible to this tech-savvy younger generation. Carriers are leveraging digitization and AI across the value chain to enhance underwriting processes, improve customer service, provide easy access and detect fraud. The rise in domestic InsurTech startups and Asian InsurTech firms competing in India continues to push traditional insurers to innovate.

This generation of consumers also expects that life insurance products are bespoke to their specific needs, leading to the development of customizable insurance plans and omnichannel strategies to provide seamless interactions across digital and physical platforms (also known as “phygital” in the country). Chatbots, virtual assistants, the ability to blend health and life products (holistic wellness using wearable technology) and 24/7 customer support are increasingly considered table stakes.  

3. Talent

According to a recent report by the Life Insurance Council (LIC), Indian carriers are making a tangible difference by reaching out to underserved communities. The industry is seeing significant growth “as the penetration of insurance accessibility is reaching out to areas and segments where people otherwise were underserved.” The report also states that “Life insurers are increasingly putting more focus on encouraging first-time life insurance buyers to buy essential life insurance solutions, which in turn is driving growth in the insurance industry.

By expanding access to insurance and reaching areas and segments of the population that were previously underserved, the insurance industry has tapped into its growth potential.” This strategy has resulted in Indian life insurers realizing over a 15 percent surge in new business premiums in May 2024, and there are indications for further growth in 2025. The report finds that insurers added more than 130,000 individual life insurance agents, despite seeing a 0.2 percent drop in the total agent workforce due to attrition.

A recent groundbreaking partnership between LIMRA and LOMA and the Institute of Insurance and Risk Management (IIRM) — the institute itself is a joint initiative between the IRDAI and the Telangana government — signifies a shared commitment to fostering excellence within the Indian insurance industry. By combining our strengths, we can elevate the skills of professionals and contribute to the growth and resilience of the sector. To sustain this growth and enable the Insurance for All by 2047 vision, India needs talented human capital with best-in-class domain knowledge, honed with a global perspective.

LIMRA and LOMA, together with IIRM, will deliver industry education to the Indian insurance sector. As we educate talent across the industry, we will direct our efforts toward assembling industry senior executives to identify how best the IIRM can help bridge any gaps between global insurance education and the needs of the Indian market, as well as equip professionals with contemporary knowledge and best practices.

Conclusion

The future of life insurance in India continues to be vibrant, accentuated by numerous opportunities for growth and innovation.  While urban areas have a relatively high penetration of life insurance, rural areas continue to be underserved. With nearly two-thirds of India’s population residing in these underserved areas, carriers have significant opportunity to expand financial protection to them. Promoting financial literacy, in both underserved communities and with younger customers, is important to ensure that consumers see life insurance as a pillar of sound financial planning and personal household financial risk mitigation. Regulatory support, AI and digitization, and talent are key trends that will shape the industry. By leveraging AI and digital tools, expanding into underserved markets and fostering financial literacy, the Indian life insurance sector is well positioned to ensure a bright future for itself and the citizens of India.