Protection products fuel double-digit VNB growth for major life insurers

Major Indian life insurers experienced robust double-digit growth in their Value of New Business last financial year, largely propelled by a strategic shift towards high-margin protection and non-participating products, signalling a healthier product mix and enhanced profitability.

Major life insurers last financial year reported close to double-digit growth in the value of new business (VNB), driven by higher sales of high-margin protection and non-participating (non-par) products.

Growth in the segment accelerated in the second half of the year after rationalisation in goods and services tax on individual life-insurance premiums lifted the average ticket size and helped offset the impact of higher operating costs arising from the tax changes.

VNB is a key measure of profitability for life insurers.

Performance Across Key Insurers

In FY26, Life Insurance Corporation (LIC) of India reported a 41.63 per cent year-on-year (Y-o-Y) rise in VNB to Rs 14,179 crore. Among private insurers, SBI Life Insurance posted a 12 per cent increase to Rs 6,670 crore, while HDFC Life Insurance recorded a 2 per cent rise to Rs 4,034 crore.

ICICI Prudential Life Insurance rang up a 10.9 per cent increase to Rs 2,629 crore while Axis Max Life Insurance saw VNB grow 26 per cent Y-o-Y to Rs 2,647 crore.

Shift Towards Higher-Margin Products

Protection and non-par products typically carry margins higher than unit-linked insurance plans (Ulips) do. While Ulips continue to account for a larger share of the product mix for most insurers, the contribution of protection and non-par products increased during the year.

At SBI Life, the protection segment recorded 10 per cent Y-o-Y growth on an annualised premium equivalent (APE) basis. Individual-protection APE stood at around Rs 1,030 crore, up 24 per cent from a year earlier, while the individual sum assured in the protection segment rose 62 per cent.

In its post-earnings call, SBI Life said:

"Our focus has been to improve the product mix in favor of non-ULIP products also ... in all three, non-par segment, par segment and also in the Protection segment.

"So this is our effort to improve the profitability of the company also by having a healthy product mix."

Strategic Focus on Retail Protection

For HDFC Life, the share of protection products in the mix rose to 7 per cent from 5 per cent in FY25.

The retail-protection business grew 43 per cent during the financial year while the retail-protection mix expanded by nearly 200 basis points year-on-year to 7.2 per cent.

Including riders, protection products now contribute nearly 10 per cent of the company's retail business.

he retail sum assured rose 28 per cent Y-o-Y. However, VNB growth remained muted because of operational and business decisions taken by the insurer.

At ICICI Prudential Life, the share of protection products in the product mix rose to 18 per cent in FY26 from 16 per cent in FY25.

The sum assured for the overall new business increased 21.4 per cent Y-o-Y to Rs 14.50 trillion while that for retail rose 35.3 per cent to Rs 4.50 trillion.

"VNB grew by 10.9 per cent Y-o-Y to Rs 2,629 crore … our focus is on growing the absolute VNB, which we have been able to achieve through improvement in the product mix and operational efficiencies even after accounting for the unavailability of input tax credit," management said during its post-earnings analyst call.

For LIC, the share of non-par products in the individual annualised premium equivalent mix rose to 35.11 per cent in FY26 from 27.69 per cent a year earlier, reflecting the insurer's continued focus on higher-margin products over the past few years.

LIC management said during its post-earnings analyst call: "The combined effect of the persistency and expense being realigned in some lines of business based on experience along with the GST impact which has been taken as part of the policy expenses explaining the movement of VNB from 17.5 per cent to 21.2 per cent."