Life Insurers See 39% Surge in New Business in December
Life insurers' new business premiums surge due to GST rate rationalization.
Photo by Xavier Mouton Photographie
Key Facts
New business premium surge: 39% to ₹42,151 crore
GST rate reduction: 18% to 0%
LIC premium surge: 57% to ₹21,293.88 crore
UPSC Exam Angles
GS Paper 3 (Economy): Insurance sector, financial inclusion, government policies
Connects to syllabus topics like financial markets, investment models, and regulatory frameworks
Potential question types: Statement-based, analytical questions on the role of insurance in economic development
Visual Insights
Key Insurance Sector Statistics (December 2025)
Key statistics highlighting the growth in the insurance sector in December 2025.
- New Business Premium Growth (Dec 2025)
- 39%
- LIC New Business Premium Growth (Dec 2025)
- 57%
- Nine-Month New Business Premium Growth
- 13%
Indicates strong growth in the insurance sector, driven by GST rate rationalization.
Highlights LIC's dominant position and significant growth.
Reflects overall positive trend in the insurance sector for the financial year.
More Information
Background
The history of life insurance in India dates back to the early 19th century with the establishment of the Oriental Life Insurance Company in 1818, primarily serving the European community. The first Indian life insurance company, Bombay Mutual Life Assurance Society, was founded in 1870. The industry remained largely unregulated until the enactment of the Insurance Act of 1938, which provided a comprehensive legal framework.
Post-independence, the life insurance sector was nationalized in 1956, leading to the formation of the Life Insurance Corporation of India (LIC). This move aimed to expand insurance coverage to a wider population and mobilize savings for national development. The sector was reopened to private players in 2000, fostering competition and innovation, leading to the diverse landscape observed today.
Latest Developments
In recent years, the Indian life insurance sector has witnessed significant technological advancements, with insurers increasingly adopting digital platforms for distribution, customer service, and claims processing. The COVID-19 pandemic further accelerated this trend, as consumers shifted towards online channels. Regulatory changes, such as the introduction of risk-based capital requirements and the push for greater transparency, have also shaped the industry.
Looking ahead, the sector is expected to continue its growth trajectory, driven by rising disposable incomes, increasing awareness of financial security, and favorable demographics. The government's focus on financial inclusion and insurance penetration is also likely to provide a boost to the industry. Furthermore, the integration of insurance products with other financial services, such as investments and retirement planning, is expected to become more prevalent.
Practice Questions (MCQs)
1. Consider the following statements regarding the factors influencing the growth of the life insurance sector in India: 1. Increased awareness of financial security among the population. 2. Rising disposable incomes and a growing middle class. 3. Government initiatives promoting financial inclusion and insurance penetration. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: D
All the statements are correct. Increased awareness, rising incomes, and government initiatives all contribute to the growth of the life insurance sector.
2. With reference to the Insurance Regulatory and Development Authority of India (IRDAI), which of the following statements is NOT correct?
- A.IRDAI is a statutory body established by an Act of Parliament.
- B.IRDAI's mission is to protect the interests of the policyholders and regulate, promote and ensure orderly growth of the insurance industry.
- C.IRDAI directly controls the investment decisions of insurance companies.
- D.IRDAI has the power to issue licenses to insurance companies.
Show Answer
Answer: C
IRDAI regulates and supervises the insurance sector, but it does not directly control the investment decisions of insurance companies. It sets guidelines and monitors compliance.
3. Which of the following is the most likely impact of a reduction in GST rates on life insurance policies, as observed in the recent news?
- A.Decreased demand for life insurance due to higher premiums.
- B.Increased affordability of life insurance policies, leading to higher demand.
- C.No significant impact on the life insurance sector.
- D.Shift towards investment in other financial instruments.
Show Answer
Answer: B
A reduction in GST rates makes life insurance policies more affordable, which is likely to lead to higher demand.