Some of the leading life insurance companies have reported a sharp decline in the number of lives covered in FY25, largely due to a slowdown in credit-linked life insurance policies.
Stress in the microfinance segment has reduced loan disbursements and, in turn, the flow of new customers to insurers.
On a net basis, the top four insurers reported a drop of around 14 million lives covered — across both retail and group segments — in FY25 compared to FY24.
Data from insurers’ annual reports show ICICI Prudential Life Insurance covered 91.74 million lives in FY25, down from 96.91 million in FY24.
HDFC Life Insurance slipped to 50 million from 66 million, while SBI Life stayed flat at 80.2 million.
State-owned Life Insurance Corporation (LIC), however, bucked the trend, reporting an increase in the number of lives covered to 92 million in FY25, from 84.8 million a year ago.
The “number of lives covered” refers to the total count of people insured under life policies during a certain period (such as financial year), including both individual customers and those covered under group schemes such as employer-provided or credit-linked life insurance.
Each insured person is counted once, whether under a standalone or group plan.
“There has been a slowdown in group credit business due to fewer disbursements in certain underlying segments like microfinance and unsecured loans.
"This has led to a decline in the number of lives covered by leading insurers,” said the CEO of a life insurance company.
The microfinance portfolio shrunk 14 per cent to ₹3.81 trillion in FY25 from ₹4.42 trillion a year earlier, as lenders prioritised risk management over growth.
Active loan accounts fell to 140 million in March 2025 from 161 million a year earlier.
According to Swarup Kumar Sahoo, senior insurance analyst, GlobalData, “The total lives insured under group life policies by four major providers — SBI Life, HDFC Life, ICICI Prudential Life, and Bajaj Allianz Life — experienced a significant reduction in FY25.
"Their aggregate fell from 179 million in FY24 to 128 million in FY25, a drop of 28.5 per cent.
"This is nearly double the overall industry contraction of 16 per cent.”
The shift reflects a move away from group credit life insurance, which is often linked with microfinance loans, said Sahoo, adding, private insurers are focusing more on protection and term products, including ULIPs.
“Term plans improve risk coverage but do not significantly increase overall coverage like regular-premium savings plans.
"ULIPs and single-premium savings products can cause inconsistent counts of covered lives,” Sahoo added.
Saurabh Bhalerao, associate director and head-BFSI research, CareEdge said the drop reflects weakness in group non-single and yearly renewal business.
“Credit life policies purchased by lenders for their clients have declined, which has resulted in a fall in these policies,” he said.
Analysts noted LIC’s resilience stems from its dominance in traditional savings, group schemes and government-linked products, which provide higher-volume acquisitions for the insurer. Its revival initiatives also supported higher active policies.
The insurer recently launched a nationwide “Special Revival Campaign” for lapsed policies, running from August 18 to October 17, 2025, offering easier revival terms for eligible customers.
