India’s non-life insurance market is expected to remain stable, according to global rating agency AM Best. The agency has maintained a positive outlook on the sector, supported by strong growth potential, favourable investment conditions, and ongoing regulatory reforms. Despite the positive factors, AM Best noted that underwriting performance remains a major concern, with the sector facing challenges from intense competition, weak pricing practices in major business lines, and increasing fraud claims.
For the financial year ending 31 March 2025, India’s non-life insurance market saw a 6.2% growth in total direct premiums, reaching a total of $35.3 billion. While this represents a solid expansion, it is lower than the 12.8% growth seen in FY 2024. Health and motor insurance—two of the largest non-life segments in the country—reported impressive growth figures of 9% and 7.9%, respectively. Health insurance holds a dominant 38.6% market share, while motor insurance accounts for 32.2%.
Despite this positive growth, the non-life sector continues to face significant challenges. Underwriting losses remain a key issue, largely due to increased competition, unrestrained pricing in crucial lines of business, and rising claims fraud. These concerns are expected to persist in the near term, despite the sector’s overall growth.
Challenges to Insurance Penetration in Rural Areas
One of the key hurdles for India’s insurance market is the low level of penetration, particularly in rural and underserved areas. In these regions, product awareness is low, and there are often few insurance agents or distribution networks. Consumer trust in insurance products remains a significant barrier. Furthermore, instances of mis-selling have raised concerns, prompting the Insurance Regulatory and Development Authority of India (IRDAI) to implement stricter rules. These reforms aim to ensure clearer product disclosures and greater transparency in the industry.
The IRDAI is also focused on long-term reforms under its “Insurance for All by 2047” vision. This includes a range of initiatives designed to improve the insurance landscape, including the “Bima Trinity” programme. This encompasses Bima Sugam, a digital insurance marketplace; Bima Vistaar, a bundled protection product; and Bima Vaahak, a women-led distribution channel. These initiatives are part of a broader effort to enhance insurance penetration, liberalise market operations, and improve distribution efficiency using technology.
Government Measures and New Regulatory Changes
To make insurance more affordable, the government has introduced several measures. Notably, the Goods and Services Tax (GST) Council has removed the 18% GST on individual life and health insurance policies, effective from 22 September 2025. This exemption covers a wide range of policies, including term plans, unit-linked insurance plans (ULIPs), endowment plans, family floater policies, and plans designed for senior citizens. This move is expected to make insurance products more accessible to a larger section of the population, particularly in a price-sensitive market like India.
Looking forward, the combination of regulatory reforms, technological advancements, and growing consumer demand could position India’s non-life insurance sector for sustained stability and gradual expansion, despite the challenges it faces.