New Delhi, Dec 22 (AHN) The number of people covered by life insurance in India has risen sharply over the last decade, increasing from about 15 crore in FY15 to nearly 40 crore in FY25, largely due to the rapid expansion of group and credit-linked insurance products, a new report said on Monday.

This strong rise in coverage reflects the steady growth of India’s life insurance sector, which has recorded a compound annual growth rate of around 13 per cent over the past 20 years, according to CareEdge ratings report.

The sector’s expansion has broadly moved in line with India’s economic growth, as GDP at market prices grew at an average rate of about 12.4 per cent during the same period, the report said.

Growth has been supported by increasing demand for group insurance, product innovation, personalised offerings, and stronger distribution networks, especially in individual insurance.

Despite this progress, India continues to remain an underpenetrated insurance market. Life insurance penetration stood at just 2.8 per cent in 2023, far lower than the average of around 5.6 per cent seen in developed economies.

Insurance density in India was also low at $70 in 2023 -- highlighting the large gap between India and global peers, as per the report.

The report notes that while more people are now insured, many policies still offer low sums assured.

This means key risks such as death protection and retirement income are not adequately covered.

Although policy renewals improved in FY25, the sector’s long-term impact will depend on offering meaningful protection and reliable pension products, rather than only increasing the number of policyholders.

The market remains highly concentrated, with the top five insurers controlling over 85 per cent of total premium income.

Life insurance continues to dominate India’s insurance industry, accounting for nearly 74 per cent of total premiums in FY25, compared with a global average of about 41 per cent.

Total life insurance premiums reached Rs 8.85 lakh crore during the year, the report said.