Individual NBP in life insurance may grow 9% in FY26: ICRA

The value of new business (VNB) margins may face short-term pressure due to the loss of input tax credit, following the GST exemption, before improving over the medium term.

Life insurance premiums for individual policies are projected to expand by 9 to 10 per cent in FY26 and FY27, as per recent estimates from ICRA. The rating agency anticipates that new business premium (NBP) levels will ascend to ₹1.8 lakh crore in FY26 and ₹2.0 lakh crore in FY27, building upon FY25’s ₹1.66 trillion base.

Margins for value of new business (VNB) could experience temporary compression, driven primarily by the withdrawal of input tax credits post-GST exemption reforms. Solvency metrics may soften but will likely remain comfortably above the mandated 1.5x threshold, supported by rising sum assured volumes and stable premium growth.

Neha Parikh, Vice-President and Sector Head at ICRA, noted that the GST exemption on retail life insurance products will improve policy affordability and accelerate medium-term NBP momentum. “After lackluster growth in H1 FY26, we foresee recovery in the latter half, culminating in approximately 9 per cent overall annual premium growth,” she stated.

Private insurers are projected to capture nearly 65 per cent of India’s individual NBP market by FY27, expanding from 63 per cent in FY25. Growth in H1 FY26 remained muted at 3.1 per cent year-on-year after robust 11.2 per cent expansion in FY25.

In contrast, group NBP—which witnessed modest 1 per cent annual increases in FY24 and FY25—surged 10.3 per cent in the first seven months of FY26. LIC’s strong performance in this segment, complemented by private insurers’ group credit life and term products, fueled this acceleration. Group NBP is forecasted to climb approximately 9 per cent for full-year FY26.

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Published on November 27, 2025