New Delhi: Rating agency Icra expects individual new business premium (NBP) for the life insurance sector to grow to Rs 1.8 lakh crore in 2025-26 and further to Rs 2 lakh crore in the next fiscal from Rs 1.66 lakh crore in the year-ending March 2025.In a release on Thursday, the agency also highlighted that the value of new business (VNB) margins may face short-term pressure due to the loss of input tax credit, following the GST exemption, before improving over the medium term.
In light of anticipated strong growth and a continued rise in sum assured, solvency is projected to moderate, while continuing to exceed the regulatory minimum of 1.5 times."The GST exemption on individual life insurance policies, which enhances customer affordability, is expected to boost individual NBP growth in the medium term. After a subdued H1, this NBP growth is projected to recover in H2 FY2026, with an overall increase of about 9 per cent anticipated for FY2026," said Neha Parikh, Vice-President and Sector Head - Financial Sector Ratings, Icra.
Private insurers are expected to expand their share of individual NBP to about 65 per cent by FY2027, up from 63 per cent in FY2025, she added.Icra said the growth in individual NBP was subdued in the first half of the current fiscal at 3.1 per cent year-on-year compared to 11.2 per cent in 2024-25 due to a high base for H1 FY2025.On the other hand, Group NBP, which saw modest growth of around 1 per cent each in FY2024 and FY2025 due to LIC's subdued performance, expanded by 10.3 per cent in seven months of FY2026.
Consequently, the overall NBP (Individual + Group) is expected to rise to Rs 4.3 lakh crore and Rs 4.7 lakh crore in FY2026 and FY2027, respectively, from Rs 4 lakh crore in FY2025.Icra also said the solvency position of private insurers remained strong at 2.1 times as of March 2025, supported by equity infusions and the issuance of subordinated debt during FY2025.
In the light of anticipated strong growth and a continued rise in sum assured, solvency is projected to moderate, while remaining above the regulatory minimum of 1.5 times, it added.
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