The Indian insurance sector is expected to experience strong growth in the new health and term segments, according to a report by Nuvama. The report predicts that the industry growth will slow down to 6.3% due to choppy market conditions, which will impact sales of linked products. Additionally, weak credit and microfinance growth could hinder the growth of credit-linked group protection.
However, the report also notes that Indian Public Sector General Insurance Companies (PSGICs) have made a significant turnaround, with all of them reporting profits again. Oriental Insurance Company Ltd, National Insurance Company Ltd, and United India Insurance Company Ltd have all posted quarterly profits, and New India Assurance Company Ltd has consistently maintained its position as a market leader.
The government is actively promoting the insurance sector, with Budget 2025-26 aiming to initiate transformative reforms across six domains to augment growth potential and global competitiveness over the next five years. The FDI limit for the insurance sector will be raised from 74 to 100% for companies that invest the entire premium in India. This enhanced limit will be available for those companies that meet the specified conditions.
The report highlights that individual APE (Annualised Premium Equivalent) growth for private insurers rose 19.6% in January 2025 but slowed to just 1.6% YoY in February 2025. Aggregate sales growth is expected to be around 6.6% in January 2025 and February 2025. The report advises that the growth in the insurance sector will be driven by the new health and term segments, as well as the privatisation of PSU insurance companies.
Overall, the report suggests that the Indian insurance sector is poised for growth, driven by the strong demand for new health and term policies, as well as the turnaround of PSU insurance companies. The increased FDI limit and simplified norms are expected to attract more foreign investment, further boosting the sector’s growth.