The share of life insurance policies sold by major private insurers in rural areas declined in financial year 2023-24 (FY24) compared to FY23.
SBI Life, HDFC Life and ICICI Prudential Life Insurance (the top three private sector players) have seen the share of insurance policies sold in rural areas decline in FY24 compared to the previous fiscal. Max Life Insurance’s share of rural policies registered an increase in FY24.
On the other hand, the share of Life Insurance Corporation of India, a state-owned company, in insurance policies sold in rural areas increased from 22.25 per cent in FY23 to 47.72 per cent in FY24.
According to experts, the industry witnessed higher growth in policy sales in second- and third-tier cities, while rural areas saw normalized growth, resulting in an overall decline in the share of policies sold in rural areas.
Additionally, there was increased demand for Unit Linked Insurance Plans (ULIPs) in urban areas in FY24 amid booming equity markets.
In the Union Budget for FY2024, 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 exempted from tax. This rule came into effect from April 1, 2023, leading to a surge in policy sales in tier-2 and tier-3 cities in March 2023. However, growth in rural and social sector policies continued at a normalized pace, reducing the share of policies sold in rural areas compared to the year-ago period.
“My total number of policies has increased significantly. After the budget changes, more policies were sold in tier 2 and tier 3 cities, while rural and social sector policies grew at a normal pace, so optically, it seems that the percentage has come down,” said Vibha Padalkar, MD & CEO, HDFC Life Insurance.
Analysts said there was an increase in demand for ULIP products, mainly in urban areas, due to healthy performance of the stock market, which further boosted the overall policy sales.
First published: August 20, 2024 | 19:54 IS
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