Private life insurers see early signs of recovery in credit life business

In a post-earnings analyst call, ICICI Prudential Life Insurance's management said the MFI-linked credit life segment has begun to revive during the quarter

Private life insurers are seeing early signs of recovery in their credit life business, as disbursements by lenders in the microfinance segment picked up in the third quarter of 2025-26 (Q3FY26), with stress in the sector normalising.

 

In its post-earnings analyst call, ICICI Prudential Life Insurance’s management said the microfinance segment of credit life business has started showing signs of revival. “We are starting to see that microfinance (MFI) has now started to turn around. I wouldn’t say it’s out of the woods yet, but very clearly, we have started to see a turnaround coming through in Q3. So, again, this is in line with the commentary that you’re also hearing generally around MFI credit, the core business of credit. So, as that business starts to build up, we should be a natural beneficiary of that,” said Dhiren Salian, chief financial officer (CFO), ICICI Prudential Life Insurance.  

 

The number of lives covered by insurers declined sharply in FY25 due to a rise in mortality claims and lower underwriting in the credit life segment amid asset-quality stress in the microfinance space. Credit life insurance is typically bundled with microfinance loans and settles outstanding dues in the event of a borrower’s death.

 

The management of HDFC Life Insurance said that credit protection rebounded strongly in Q3. The MFI segment saw a pickup aided by a favourable base, while non-MFI segments continued to deliver steady growth. Retail sum assured grew 33 per cent over the April-December period in FY26 (9M FY26). 

 

“Credit life as a segment, which is pure protection, is something that has started to do really well: 25 per cent odd growth in this quarter,” said Niraj Shah, CFO, HDFC Life Insurance.

 

The management of Canara HSBC Life Insurance also said that the green shoots of goods and services tax (GST)-led demand are now visible with its retail protection business growing almost 3 times quarter-on-quarter, while credit life business continues to see healthy growth of 50 per cent during the quarter. “We believe there is a structural uptick in this segment and hence expect that demand will continue to rise,” Anuj Mathur, managing director and chief executive officer (MD & CEO), Canara HSBC Life Insurance said.