Life insurance sector`s individual NBP to grow at Rs 1.8 lakh crore in FY26: ICRA
Rating agency ICRA has estimated individual new business premium (NBP) for the life insurance sector to grow at around Rs 1.8 lakh crore in FY2026 and Rs 2.0 lakh crore for FY2027, from Rs 1.66 lakh crore in FY2025. Further, it expects GST exemption on individual life insurance policies, which enhances customer affordability, to boost individual NBP growth in the medium term. However, in short term, the agency noted that the value of new business (VNB) margins may face pressure due to the loss of input tax credit, following the GST exemption.
ICRA expects share of individual NBP of private insurers to rise to around 65% by FY2027, up from 63% in FY2025. On the other hand, Group NBP, which saw modest growth of around 1% each in FY2024 and FY2025 due to LIC's subdued performance, expanded by 10.3% 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.
In the 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. It also noted that 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.
