The share of life insurance policies sold by top private insurers in rural areas declined in the financial year 2023-24 (FY24) compared to FY23.
SBI Life, HDFC Life, and ICICI Prudential Life Insurance—the top three players from the private sector—have seen the share of insurance policies sold in rural areas fall in FY24 compared to the previous financial year. Max Life Insurance’s share of rural policies recorded an increase in FY24.
On the other hand, the state-run Life Insurance Corporation of India’s share of insurance policies sold in rural areas jumped from 22.25 per cent in FY23 to 47.72 per cent in FY24.
According to experts, the industry witnessed higher growth in the sale of policies from tier 2 and tier 3 cities, while rural areas saw normalised growth, resulting in an overall drop in the share of policies sold in rural areas.
In addition, there was increased demand for Unit Linked Insurance Plans (ULIPs) in urban areas in FY24 amid buoyant equity markets.
In the Union Budget for FY24, Finance Minister Nirmala Sitharaman proposed that insurance policies (excluding Unit Linked Insurance Plans or ULIPs) with an aggregate premium exceeding Rs 5 lakh and the maturity amount would not be exempt from tax. This rule came into effect on April 1, 2023, which led to a surge in the sale of policies in tier 2 and tier 3 cities in March 2023. However, the growth of rural and social sector policies continued at a normalised rate, lowering the share of policies sold in rural areas compared to the year-ago period.
“My overall number of policies grew handsomely. After the changes in the budget, more policies were sold in tier 2 and 3 cities, whereas my rural and social sectors’ policies grew at a normal rate, so optically it looks like the percentage has fallen,” said Vibha Padalkar, managing director (MD) & chief executive officer (CEO), HDFC Life Insurance.
Analysts said there was a surge in demand for ULIP products, mainly in urban areas, due to the healthy performance of the equity market, further driving the overall sale of policies.
First Published: Aug 20 2024 | 7:54 PM IST