In Q1FY26 (April–June 2025), life insurance policy sales in India dropped 10.11% year-on-year (YoY), with total policies sold falling to 4.8 million from 5.37 million in Q1FY25. LIC bore the brunt, witnessing a 14.80% drop to 3.04 million policies, while private insurers saw a marginal 0.80% decline. Despite lower volumes, the industry’s new business premium (NBP) rose by 4.25% YoY to ₹93,544.54 crore, driven by LIC’s ₹59,410.68 crore and private insurers’ ₹34,133.86 crore contributions.

The decline stems from regulatory and tax reforms. The IRDAI’s new surrender value norms, effective October 2024, mandated higher payouts to early policy surrenders, disrupting LIC’s model and causing a 31.6% drop in individual policy sales in December 2024. Concurrently, new tax rebate policies in Budget FY26 and past rules taxing high-premium policies reduced insurance's tax-saving appeal.

LIC, holding 63.52% NBP share, faced deeper pressure due to its traditional product mix and slower adaptation. In contrast, private insurers like Axis Max Life and SBI Life quickly recalibrated, boosting average ticket sizes and maintaining 10–17% APE growth.

IRDAI’s broader reforms—including Bima Vistaar, Bima Vahak, and Bima Sugam—are expected to improve insurance access and operational efficiency. Still, short-term turbulence from regulation and weak credit demand will weigh on policy sales.

Looking ahead, LIC expects improvement in H2FY26 as product adjustments stabilize. Private insurers are better positioned to grow steadily. Long-term prospects remain positive, driven by digitalization, favorable regulations, and a push toward “Insurance for All by 2047.” However, profitability may remain under pressure as firms balance competitiveness with rising policyholder benefits.