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The share of life insurance policies sold by top private insurers in the rural areas declined in the financial year 2023-24 (FY24) compared to previous year.
SBI Life, HDFC Life, ICICI Prudential Life Insurance -- the top three players from the private sector-- have seen the share of insurance policies sold in rural areas drop in FY24 as compared to the previous financial year. Max Life Insurance’s share of rural policies recorded an increase in FY24.
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On the other hand, 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 sale of policies from tier 2 and tier 3 cities while the rural areas saw a normalised growth, resulting in overall drop in share of policies sold in rural areas.
In addition, there was an 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 sale of policies in tier 2 and tier 3 cities in March 2023. However, the growth of rural and social sector policies grew at normalised rate lowering the share of policies sold in rural areas compared to the year ago period.
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“My overall number of policies grew handsomely. After the changes in budget, more policies were sold in tier 2 and 3 cities whereas my rural and social sectors policy 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 that there was a surge in demand for Ulip products mainly in the urban areas as a result of the healthy performance of the equity market further driving the overall sale of policies.
% of Rural policies sold to total policies
Source: Annual Report
% of Rural policies sold to total policies
Source: Annual Report
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