India’s micro-insurance segment in life insurance has achieved a significant milestone in 2023-24, surpassing Rs 10,000 crore in new business premium (NBP) for the first time, as per the Annual Report by the Insurance Regulatory and Development Authority of India (IRDAI). This growth highlights the sector’s expanding reach, particularly among low-income groups, and the increasing penetration of affordable insurance products across the country.
Growth in micro-insurance premiums
The micro-insurance market, which primarily targets the economically vulnerable, saw a rise of 23.5 percent in NBP, reaching a total of Rs 10,860.39 crore for the year, compared to Rs 8,792.8 crore in FY23. This rise in micro-insurance premiums showcases how financial products tailored for the low-income population are gaining traction in India.
While the individual NBP witnessed a decline of 23.78 percent year-on-year (YoY), the group NBP rose significantly by 24.61 percent YoY to Rs 10,707.82 crore, primarily driven by private life insurers. Private insurers contributed Rs 10,708.4 crore to the segment, while Life Insurance Corporation of India (LIC), the state-owned insurer, accounted for Rs 152 crore.
Private insurers lead the charge
Private insurers led the micro-insurance sector with a remarkable contribution of Rs 10,690.73 crore from 469 schemes. In contrast, LIC collected Rs 17.09 crore through its 4,993 schemes. The growing dominance of private insurers reflects the sector’s capacity to reach more people and scale up affordable insurance offerings for low-income communities.
The number of individuals covered under the micro-insurance scheme stood at a remarkable 178.39 million, showcasing the expanding outreach of insurance products among those previously underserved.
Expanding the reach with 102,000 micro-insurance agents
The number of micro-insurance agents has also grown, reaching 102,000 by the end of FY24. Notably, public-sector life insurers employed 19,166 of these agents, while the remaining were affiliated with private insurers. Micro-insurance agents play a critical role in driving awareness and adoption of these products among low-income groups.
Micro-insurance products are distributed through grassroots organizations like self-help groups, microfinance institutions, and NGOs. The introduction of the “micro-insurance agent” concept has further facilitated the penetration of these products in rural and underserved areas.
Regulations foster growth in micro-insurance
IRDAI’s regulatory initiatives, which started in 2005, have played a crucial role in the growth of this segment. The introduction of micro-insurance norms in 2015, allowing life, pension, or health benefits of up to Rs 2 lakh with an annual premium capped at Rs 6,000, provided the much-needed boost to the sector. These efforts have ensured that micro-insurance remains affordable and accessible to the lower-income demographic.
India’s micro-insurance sector drives financial inclusion and growth
India’s micro-insurance segment is witnessing strong growth, making financial protection accessible to the masses. This surge in premiums reflects the success of regulatory initiatives and the tireless efforts of insurers and agents to bring affordable insurance solutions to low-income groups. As the sector continues to evolve, it is poised to play a pivotal role in financial inclusion and securing the future of millions across India.
